By Scott Kanowsky
Investing.com -- EasyJet PLC (LON:EZJ) has unveiled plans to buy 56 new A320neo jets from European planemaker Airbus Group SE (EPA:AIR) to replace older aircraft and modernize its fleet.
The budget carrier also said it will change a separate order of 18 A320neo planes to Airbus' popular A321neo.
EasyJet said these moves would reduce costs by boosting fuel efficiency and increasing the average seat count on its airplanes. It described these new aircraft as essential to its operations, adding that using older planes may increase costs and potentially threaten the current scale of the business.
"We believe this will support positive returns for the business and the delivery of our strategic objectives," EasyJet CEO Johan Lundgren said in a statement.
According to the airline, the total cost of the purchase will be "very substantially below" the average listing price of $6.5B, due to a prior agreement between EasyJet and Airbus made in 2013. EasyJet said it will pay for the purchase using internal resources, cash flow, sale and leaseback transactions, and debt.
"While the board will regularly review optimal sources of financing, there is currently no expectation that shareholders will be asked to fund any aspect of the proposed purchase," the company said.
The deal, which still requires shareholder approval, also firms up EasyJet's new aircraft orders from Airbus until 2028. But the company warned that it would not have a "secure supply" of planes between 2026 to 2029 if the purchase does not proceed.