EasyJet Plc (EZJ), Europe’s second biggest discount carrier, said it agreed to buy 25 pairs of take-off and landing slots at London’s Gatwick airport for 20 million pounds ($25.7 million) from Flybe Group Plc. (FLYB)
The slots at the discount carrier’s largest base will allow EasyJet to boost frequencies on existing routes and add destinations, the Luton, England-based company said in a statement today. The transfer will take effect in mid 2014.
Flybe, Europe’s biggest regional airline, said this month that it was in talks to sell all its slots at Gatwick as part of a cost-cutting plan aimed at returning the carrier to profit. The airline’s pilots agreed May 3 to a 5 percent reduction in pay to avoid job losses. Its regional focus means Flybe has higher unit costs than discount carriers like EasyJet.
“This looks a sensible deal,” Investec analyst James Hollins said in a note to investors today. “This will enhance EasyJet’s share dominance at Gatwick where we estimate the group has a greater than 40 percent market share currently.”
The exchange is subject the approval of the International Air Transport Association, as well as acceptance by shareholders expected in July, Flybe said in a separate statement. The airline flew 550,000 passengers from Gatwick in the year ending March 31 and today operates seven routes in and out of the airport.
Flybe also said that it has agreed with Embraer SA (EMBR3) to defer 16 E175 aircraft due in 2014 and 2015, and the models will not be delivered until 2017 to 2019, helping the carrier cut pre-delivery payment by 20 million pounds during the winter season of this year.
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