Budget airline easyJet plans Airbus fleet upgrade

New 180-seater A320 planes will allow no-frills carrier to boost the number of passengers it can carry from 60 million a year to around 90 million
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Budget airline easyJet is to upgrade and expand its aircraft fleet under a deal to buy 135 Airbus planes over the next nine years.

The no-frills carrier said the new 180-seater A320 planes will allow it to boost the number of passengers it can carry from 60 million a year to around 90 million.

Its new aircraft will also be more fuel-efficient, which means they cost less to run and are more environmentally friendly.

The move will allow easyJet to replace around 85 of its current 211-strong fleet of 156-seater planes, as well as giving it the room to expand and add routes.

It also has the option to buy a further 100 Airbus planes as part of the deal.

But the scale of the fleet acquisition means easyJet must get shareholder approval, with the backing of 50% of investors required, and is likely to reignite the long-running row with founder and largest shareholder Sir Stelios Haji-Iaonnou.

Sir Stelios, who with his family controls a near-37% stake in easyJet, has been a vocal opponent of the group's plans to increase its fleet.

He said earlier this year that he believes the new planes are not necessary and will be acquired at the detriment of shareholders.

Luton-based easyJet has ordered 35 current generation A320 planes for delivery between 2015 and 2017 and 100 new generation A320neo aircraft from 2017 until 2022.

It said it secured a steep discount for the planes, but did not disclose the cost of the deal.

Carolyn McCall, chief executive of easyJet, said: "This is a great outcome for easyJet, our shareholders and our passengers, and will ensure that easyJet is able to continue its successful strategy of delivering profitable growth and returns to shareholders."

EasyJet said the new aircraft would allow it to fulfil aims to increase its seat capacity by between 3% and 5% a year, while slashing costs per seat by between 11% and 12%.

It said if the deal did not go through, costs per seat would be around £2.98 higher in 10 years' time, which it claims would have a "material" impact on profits.

The group plans to buy around 30% of the new aircraft outright and lease the remainder through third parties.

It will spend the next few weeks meeting major shareholders to garner support ahead of the investor vote on July 11.

EasyJet has recently reported robust results after benefiting from rivals cutting capacity.

It carried 26.6 million people in the six months to the end of March, a rise of 5.3% on a year earlier as revenues surged 9.3% to £1.6 billion and losses narrowed 46% to £61 million.

The group expects more growth in its second half - when airlines traditionally make the bulk of their profits from holidaymakers.