JetBlue is ordering 60 planes in a $5.4 Billion deal with Airbus.
The airplane carrier is ordering Airbus’s A220 jets; a remodeled jet that was formerly known as Bombardier Inc’s (TSE:BBD.B) C Series. Airbus took control of that struggling line at the start of this month.
JetBlue was on the hunt for some time for a more efficient smaller jet to replace its current aircraft which it uses for routes such as Boston to New York; journey’s with relatively small fly-time and quick turnover. The A220 jets, with a maximum capacity to hold up to 160 passengers, will be replacing its current fleet; the Embraer E-190 which will be retired in 2020. This deal further solidifies a relationship between JetBlue and Airbus as the company moves away from Embraer’s commercial jets who Boeing (NYSE:BA) (Airbus’ great competitor) last week announced it wanted to acquire.
“This fleet transaction is a game changer for JetBlue’s economics as we progress through the next decade,” stated Steve Priest, the chief financial officer of JetBlue.
As stated, the deal is worth $5.4 Billion, but this is the plane’s listed price before any discounts given and airlines usually receive a discount on jets and bulk-buying.
For the company, the transaction will mean an all-Airbus fleet, which Priest called an “undoubted advantage”. Costs will be reduced on parts and training and they will reduce the carrier’s annual cost for each seat-mile flown by five percent while also adding about three percent to its pretax profit margin, according to Priest.
JetBlue may also follow up with Airbus for a further 60 aircraft in 2025 as optioned in the deal. Similarly, as part of the agreement, it will upgrade its order for 25 Airbus A320neos to 25 Airbus A321neos — the larger more powerful engine model. Such an engine would be for intended use to ferry passengers to Europe and further destinations.
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