MIAMI – European Low-Cost carrier easyJet (U2) has today announced that it will be deferring its aircraft deliveries for 5 years, pushing them back to 2025.
The move comes after the carrier, like many around the globe, has had to make sweeping cuts and changes to survive the COVID-19 pandemic that has gripped the world in recent months.
Thus, the carrier is setting its self up a smaller travel market as it does not predict pre-COVID travel levels until 2023.
32 deferred aircraft
Part of this plan was made in April when the carrier announced plans to defer delivery of 24 aircraft that have been pushed back for delivery between 2025 and 2027 with additional flexibility options on the additional orders placed with Airbus.
easyJet Chief Executive Johan Lundgren said in a statement that he was pleased to confirm the detail of easyJet’s revised aircraft delivery commitments.
“The 24 aircraft that were originally deferred beyond December 2022, will now be delivered from FY2025 to FY2027, whilst our significant discount from list price remains unchanged,” said the CEO.
The chief executive also 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.”
Lindgren noted that U2 has also agreed further flexibility in relation to deferral rights and future purchase options.
In total, 32 aircraft were deferred, with initial delivery dates between June 2020 and December 2021. As 8 aircraft were pushed back from FY2020 to FY2022, as announced on 9 April 2020, the net number of Financial Years 2020, 2021 and 2022 deferrals was 24 aircraft (being 32 less 8).
The decision to defer the £4.5bn order has been met with great opposition from easyJet founder Stelios Haji-Ioannou, who tried to cancel the order stating “it would bring the carrier to the ground.”
easyJet also confirmed that they now have the flexability up until Decemeber 2020 to defer two aircraft and an option to delay an additional severn aircraft which are due for delivery between FY2022 and FY2026.
Internal division at the company
It is believed that he attempted to vote out senior easyJet executives in an effort to gain a majority vote to cancel the order. While there is no clear proof of this, there are signs that U2 is divided on its approach for the best way to recover the airline.
A combined stance from shareholders moved and voted against him and ended up agreeing to defer the order, which could mean that U2 will have to pay and additional £95m in labor costs on the new aircraft.
However, the carrier said that “the cash flow over the coming 16 months would benefit from the deferrals.”
Possible layoffs amid a gradual recovery
The announcement to defer the orders is a good sign that the airline believes there will be a steady road to recovery for air travel in Europe.
Despite this though, the airline has already announced that it may need to cut around 30% of its workforce to better match the lowered demand for air travel.
The decision entails that around 4,500 of U2’s 15,000-strong workforce are at risk of losing their jobs.