EasyJet Plc, Europe’s second-biggest low-cost airline, agreed to buy 15 Airbus SAS A320 planes with a list price of $1.1 billion as Chief Executive Officer Carolyn McCall switches strategy to lure more business travelers.
EasyJet won a “substantial” discount on the jetliners for delivery from 2012 to 2014 and secured options for a further 33 of the same type, the British company said today in a statement. It also converted orders for 20 smaller Airbus A319s into A320s.
McCall, CEO since July, said in November she’ll begin offering flexible tickets to help appeal to corporate flyers. A higher proportion of bigger planes could maximize capacity at busier airports, and No. 1 investor Stelios Haji-Ioannou, who opposed the growth strategy of EasyJet’s previous chief, said he’s keen to see details of the deployment plan for the fleet.
“They want to provide a more attractive package to business travelers and at congested airports like Paris larger aircraft will give them an advantage,” said Gert Zonneveld an analyst at Panmure Gordon in London who recommends buying EasyJet shares.
EasyJet rose 4 percent to close at 457.6 pence as of 4:30 p.m. in London today, boosting the company’s market value to 1.97 billion pounds ($3.07 billion). The stock advanced 25 percent last year.
EasyJet’s fleet will grow to 220 aircraft by September 2013 from 196 at the same point in 2010, with the proportion of A320s increasing to 25 percent from 12 percent, it said in the statement. The model seats 180 people, 24 more the A319.
The order will help deliver on the Luton, England-based airline’s strategy of “continued profitable growth,“ McCall said in the statement, adding that the terms include the flexibility to vary capacity growth to reflect economic conditions.
EasyJet’s intention is to expand in continental Europe, where low-cost airlines have a smaller share of short-haul flights, spokesman Paul Moore said by phone. Discount carriers control 24 percent of the French market versus 48 percent in the U.K., Moore said, while declining to comment on specific routes.
Stelios, who is EasyJet’s founder and No. 1 shareholder and goes by his first name, clashed with Andy Harrison, McCall’s predecessor, over fleet expansion. The entrepreneur said in November 2008 that EasyJet had ordered too many planes and would struggle to fill them during the recession.
“We shall see if these 15 incremental aircraft will find deployment on profitable new routes and earn the appropriate return on capital employed,” Stelios said in a statement. He said he was “hoping to get greater transparency” as to the routes on which the planes will be used.