easyJet has reached an agreement with plane manufacturer Airbus to push back the delivery of 24 A320neo initially intended to join the fleet between 2020 and 2022. The British low-cost carrier will now take delivery of the planes between 2025 and 2027.
The easyJet vs. Airbus saga continues, albeit perhaps with a little less drama. Previous installments saw easyJet founder Sir Stelios Haji-Iounnaou offering a reward of £5 million ($6.2 million) to anyone willing to provide information on the planemaker that could lead to the airline getting out of the larger part of its order for 107 aircraft.
Sir Stelios has also tried to have the carrier’s CEO and three other board members ousted for not siding with him on the cancellation.
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Additional costs due to inflation
The airline was due to take delivery of ten of the new A320neo jets this year, another 12 in 2021, and two more in 2022. Now the company has reached an agreement with Airbus for deferral of those 24 deliveries after initial talks back in April.
The planes will now be delivered five years later than previously scheduled, between 2025 and 2027. This will most likely mean extra costs for easyJet, who might have to pay an additional £95 million ($120 million) due to inflation.
Granted, it is not a very large portion of the entire outstanding order for £4.5 billion ($5.5 billion). Hopefully, demand will have picked back up enough by then to make a hundred million, give or take, sting a little less. There is also the savings in upkeep and maintenance, as well as credit costs vs. liquidity to take into consideration.
“Any increase would be materially offset by the reduced cost of borrowing associated with the significant cash flow benefits in the next 16 months, arising from these deferrals,” says the airline, as reported by FlightGlobal.
Option deadlines extended
The arrangement also provides easyJet with the option until December this year to defer two more deliveries. It could also opt against taking seven more planes scheduled for 2022 to 2026.
The agreement also includes deadline extension for exercising existing options on 13 additional aircraft. The deadline on seven of the jets has been extended by a year, until November 2021. The options for the remaining six are postponed until the same month in 2022.
“The changes agreed defer capacity in the medium term while continuing our long-term strategy of replacing our older fleet with the advanced and lower fuel-burning A320neo family,” easyJet chief executive Johan Lundgren said according to FlightGlobal.
What does this mean for the company?
What this new agreement means for the relationship between easyJet’s founder and its board is unclear. Just this Friday, Sir Stelios sold £13 million ($16.3 million) worth of shares in the company.
Do you think easyJet will still need all the A320neos going forward? Let us know your thoughts in the comments.