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Airbus wins Easyjet bid, dents Boeing's ambitions

Airbus wins Easyjet bid, dents Boeing's ambitions
By Euronews
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Boeing’s ambitions were grounded as rival Airbus pipped them to the post to win Easyjet’s business. The low-cost carrier said it would expand its fleet with 135 Airbus jets at the cut price cost of 8.9 billion euros.

One hundred of the planes bought will be the next generation fuel efficient Airbus320neo. Easyjet hopes to boost its seat capacity by five percent.

At the Paris Airshow the airline said the selection process was very competitive with Airbus slashing its list price to make the winning bid.

According to Airbus the order will support almost 2,500 jobs. However, the sale goes against the wishes of Easyjet founder Stelios Haji-Ioannou. As the largest shareholder – with a 37 percent stake – he has been a vocal critic of the fleet upgrade.

The deal is still subject to approval by more than 50 percent of the shareholders.

‘More questions than answers’

Haji-Ioannou – who is widely known just as Stelios – founded the airline in 1995 and has a 37 percent stake. He believes buying new jets will destroy shareholder value and that the money would be better spent on improving returns to investors.

“This is yet another huge capital expenditure deal with the same supplier at ‘secret’ prices,” Stelios said in a statement that was sent to Reuters. “It raises more questions than answers.”

Sources close to easyJet CEO Carolyn McCall told Reuters she is confident of winning approval for the deal from shareholders despite opposition from Stelios, who is expected to vote against it at a shareholder meeting due to take place next month.

EasyJet was reportedly sending a detailed circular to shareholders and executives from the airline will meet its top institutional investors to discuss the order in the coming weeks.

“We will ask all our questions when we have seen the full shareholder circular which must include the actual price to be paid for each aircraft and the incremental profit each of these aircraft will actually deliver,” Stelios added.

Stelios quit the airline’s board in 2010 after a row over strategy. Since then he has been critical of many of its plans, including fleet expansion, executive pay and dividend policy.

McCall is popular among the majority of shareholders given the annual dividend and profits have doubled since she took over in July 2010.

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