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EasyJet has struck a deal to expand its fleet by buying more than 150 new planes and outlined plans to restart shareholder dividends after a “record summer” of flying.
The UK-based airline on Thursday announced a deal with Airbus to deliver 157 new short-haul aircraft from 2029 and acquire purchase rights for a further 100 aircraft, bringing the total on order to 2034. 315 aircraft.
“This will allow easyJet to continue its fleet modernization and growth… while delivering significant benefits, including cost efficiencies and sustainability improvements,” chief executive Johan Lundgren said.
The new aircraft order will allow easyJet to replace older aircraft with newer, more fuel-efficient models and facilitate “orderly growth” over the next decade, the company said.
EasyJet joins a growing number of airlines placing orders with Airbus and Boeing to drive growth over the next decade and beyond. Earlier this year, Ryanair signed an agreement to purchase more than 300 Boeing aircraft, while Air India announced an order for 470 aircraft from Airbus and Boeing, one of the largest aviation orders in history.
But the surge in orders has caused supply chain problems and made it difficult for manufacturers to deliver aircraft to customers.
EasyJet said it expected supply chain bottlenecks at Airbus and Boeing to continue into the 2030s and that immediate orders would be needed to “ensure supply for future delivery slots”.
The deal follows a landmark order signed by Airbus in 2022 that saw the airline’s largest shareholder and founder Stelios Haji-Ioannou abandon his long-standing opposition to ordering new aircraft.
EasyJet on Thursday also became one of the first major European airlines to announce the resumption of shareholder dividends in the wake of the Covid-19 pandemic, one of the clearest signs that the industry has emerged from the crisis.
The company said in a full-year trading update that it planned to pay shareholders 10% of its 2023 after-tax profits, with the first payment expected early next year.
Lundgren also set new targets for the business, including achieving pre-tax profits of £1 billion in the “medium term”.
“This will be driven by reducing winter losses, expanding our fleet and increasing easyJet holidays,” he said.
The airline expects pre-tax profits for the year to September to be between £440 and £460 million, following a record summer of profits.
EasyJet expects flight capacity to increase by 15% year-on-year in the final three months of the year, taking into account demand at the start of the seasonally slow winter, but prices will also rise.
Signs of healthy flying demand will be welcome as the industry faces questions about whether the travel boom is sustainable.
Goodbody analysts said easyJet’s full-year results were “slightly below” consensus, while guidance for the quarter was “largely unchanged”.
“This may disappoint short-term investors slightly. However, the reintroduction of dividends, new medium-term targets and new aircraft orders should be welcomed,” analysts said.
Shares of the stock fell nearly 4% in early trading Thursday.
Despite strong summer profitability and management’s confidence in its prospects, easyJet’s shares have fallen 14% in the past six months, lagging many of the airline’s rivals.
“EasyJet believes it has a path to higher profitability than the street,” said Bernstein analyst Alex Owen.
“A solid plan to increase profits will deliver numbers – we expect more color,” he added.
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