© Reuters. FILE PHOTO: The logo of Airbus is pictured at the entrance to the Airbus factory in Bouguenais, near Nantes, France, on July 2, 2020. REUTERS/Stephane Mahe
LONDON (Reuters) – EasyJet will buy 56 Airbus A320neo planes and convert previous orders into 18 new A321neo planes, the British airline said on Tuesday, fulfilling a 2013 deal with the European plane maker option in .
The British airline said the proposed order, which is subject to shareholder approval, confirms its order with Airbus until 2028.
Deliveries of the $6.5 billion plane will begin in fiscal 2026 to replace the airline’s older A319s and A320s, the company said.
Air travel has rebounded strongly since the lifting of COVID-19 restrictions, with European airlines and airports struggling to keep up with demand.
Airbus and Boeing (NYSE: ) also face challenges in increasing production, with supply chain pressures the biggest hurdle.
EasyJet said its order, thanks to concessions granted in the 2013 agreement, ensures it can replace older planes and use more efficient, lower-emission and quieter jets, paying significantly less than the list price.
It said the planes were funded from cash flow, sale and leaseback transactions and debt.
Chief executive Johan Lundgren said the order continued to renew the airline’s fleet with more seats and improved cost-effectiveness.
“We believe this will support positive returns from the business and achieve our strategic goals,” he said.
Shares of easyJet reversed early gains in early afternoon trading, falling 5%.
Russ Mold, investment director at AJ Bell, said congestion at UK airports may have prompted easyJet to cancel more flights throughout the summer, but it did not dampen its willingness to become a bigger player in the long run.
“There is a strategic logic to the deal, but easyJet must first get approval from shareholders who may be angry at its weak share price performance this year,” he said.
In December 2020, easyJet reached an agreement with Airbus to delay some aircraft deliveries under a 2013 agreement as the COVID-19 pandemic puts its finances under severe pressure.
The Airbus order has proven to be a source of controversy with easyJet’s largest shareholder, Stelios Haji-Ioannou, who opposed the investment at the height of the pandemic.