EasyJet Places $3.8 Billion Plane Bet After Record Winter Loss
EasyJet Plc ordered Airbus SE aircraft with a list price of $3.8 billion, betting that a fare slide is set to reverse after pushing the U.K. airline to record winter losses.
Europe’s second-biggest discount carrier converted purchase options for 30 A321neos, marking its first deal for the biggest version of Airbus’s upgraded narrow-body model, with deliveries due to start next year, it said.
EasyJet is buying new planes after projecting that revenue per seat, a measure of fares, will decline by a low single digit percentage this quarter after slumping almost 10 percent in the fiscal first half through March 31. Bookings are running ahead of last year with 77 percent of seats sold for the current three months, while competitors are reining in capacity, easing a supply glut.
“Demand to fly remains strong and reflects growing evidence that consumers are prioritizing expenditure on flights and holidays,” EasyJet Chief Executive Officer Carolyn McCall said.
Adding the A321neos will boost the number of seats per flight, McCall said, improving unit costs by as much as 9 percent versus the biggest planes EasyJet currently operates and maximizing growth at slot-constrained hubs such as London Gatwick.
Shares of EasyJet were trading 3.7 percent lower at 1,261 pence as of 8:05 a.m. in London after the Luton, England-based carrier posted an adjusted pretax loss of 212 million pounds ($274 million) for the first half.
Sterling Impact
The pound’s slide following last summer’s Brexit vote wiped 82 million pounds from earnings, while the discounting drive ate up savings from lower fuel costs and came as demand remained subdued on some routes following a spate of terrorist attacks on European cities and tourist centers.
Company expectations for the full year are in line with the current market consensus, McCall said. Analysts predict a pretax profit of about 372 million pounds for fiscal 2017.
EasyJet said it remains on track to source an air operating certificate located in mainland Europe this summer. The carrier may need the flying rights to carry on serving routes within the European Union once Britain exits the bloc.
EasyJet Plc ordered Airbus SE aircraft with a list price of $3.8 billion, betting that a fare slide is set to reverse after pushing the U.K. airline to record winter losses.
Europe’s second-biggest discount carrier converted purchase options for 30 A321neos, marking its first deal for the biggest version of Airbus’s upgraded narrow-body model, with deliveries due to start next year, it said.
EasyJet is buying new planes after projecting that revenue per seat, a measure of fares, will decline by a low single digit percentage this quarter after slumping almost 10 percent in the fiscal first half through March 31. Bookings are running ahead of last year with 77 percent of seats sold for the current three months, while competitors are reining in capacity, easing a supply glut.
“Demand to fly remains strong and reflects growing evidence that consumers are prioritizing expenditure on flights and holidays,” EasyJet Chief Executive Officer Carolyn McCall said.
Adding the A321neos will boost the number of seats per flight, McCall said, improving unit costs by as much as 9 percent versus the biggest planes EasyJet currently operates and maximizing growth at slot-constrained hubs such as London Gatwick.
Shares of EasyJet were trading 3.7 percent lower at 1,261 pence as of 8:05 a.m. in London after the Luton, England-based carrier posted an adjusted pretax loss of 212 million pounds ($274 million) for the first half.
Sterling Impact
The pound’s slide following last summer’s Brexit vote wiped 82 million pounds from earnings, while the discounting drive ate up savings from lower fuel costs and came as demand remained subdued on some routes following a spate of terrorist attacks on European cities and tourist centers.
Company expectations for the full year are in line with the current market consensus, McCall said. Analysts predict a pretax profit of about 372 million pounds for fiscal 2017.
EasyJet said it remains on track to source an air operating certificate located in mainland Europe this summer. The carrier may need the flying rights to carry on serving routes within the European Union once Britain exits the bloc.
