easyJet and Airbus finalize agreement on 32 aircraft deferrals

Eric Salard | Flickr.com

As the Coronavirus pandemic continues to impact the aviation industry, airlines are finding ways to minimize costs to survive. Some are retiring old aircraft, while some are laying-off their workforce in large numbers. In the same vein, many airlines are trying to defer aircraft deliveries from manufacturers. British Low-Cost Carrier, easyJet has also been trying to defer deliveries for their Airbus A320neo aircraft orders from Airbus.

The airline announced on June 16th 2020 that it has come to an agreement concerning aircraft deferrals with Airbus. According to the finalized deferral plan, 32 aircraft deliveries have been pushed back. 8 aircraft meant to be delivered in Fiscal Year (FY) 2020 will now be delivered in FY2022, and 24 aircraft planned for delivery between FY2020-22 will now be delivered five years late, between FY2025-27.

easyJet CEO Johan Lundgren said: “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.”

These aircraft were ordered by easyJet in 2013, and according to the initial agreement with Airbus, easyJet was subject to a substantial discount. However, the airline would have to pay for any inflation at market prices concerning material and labour costs. This clause of the 2013 agreement remains unchanged. The airline is still to receive the discount but the price for the future aircraft will increase by up to £95 million.

In this new agreement with Airbus, easyJet now also has the option to defer two to seven aircraft until December 2020, which at present are scheduled to be delivered between FY2020-26. Following this announcement, easyJet’s share price shot up 7% to 821.4p on Tuesday, June 16th, 2020, as reported by the London Stock Exchange.

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