The easyJet fleet overhaul increasing profits and reducing costs

EasyJet is taking decisive steps to strengthen its competitive edge in the budget airline market by replacing 80 of its ageing Airbus A319 jets with more modern and efficient models. This fleet upgrade is a significant move, as many of these A319s have been in service for up to 20 years. The smaller A319s, which carry 156 passengers, will be retired in favour of larger Airbus models such as the A320neo, accommodating up to 235 seats.

Kenton Jarvis, easyJet’s chief executive, described the move as transformative for the airline’s profitability. The introduction of these new aircraft is expected to substantially reduce costs and increase earnings, allowing the airline to close the cost-per-passenger gap with key competitor Ryanair. While Ryanair is also upgrading its fleet, easyJet’s move to much larger planes offers greater cost efficiencies.

The higher passenger capacity comes without significantly increasing operating costs. The new planes require the same number of pilots and cabin crew as the older models, keeping labour costs stable. Engineering expenses are also maintained due to the unchanged number of engines, while navigational costs remain largely the same. These operational advantages make the switch to the A320neo 19% more cost-efficient per seat.

Additionally, the improved fuel efficiency of the A320neo, thanks to its advanced engineering, cuts fuel consumption per seat by 25%. This development aligns with easyJet’s efforts to enhance sustainability and reduce operating expenses. Replacing the smaller A319s with the A320neos could lead to operational savings of £10 to £16 per seat, with potential overall savings translating to £3 per seat across the fleet.

EasyJet’s decision to concentrate on larger jets is underpinned by its historical reliance on smaller planes. Founded as a Boeing operator in 1995, the airline switched to Airbus in 2002, securing a discounted deal for the A319 fleet. While financially beneficial at the time, these smaller planes are now proving less efficient. Transitioning to larger aircraft represents a pivotal step in increasing capacity and profitability without the need for additional operating slots, which are scarce and costly at major European airports.

The move also supports easyJet’s expansion into new destinations, including North Africa and Cape Verde, leveraging the longer range of its new aircraft. This strategic focus on larger planes also complements easyJet’s emphasis on operating from major airports, where higher fares offer additional revenue opportunities compared to the budget airports preferred by Ryanair.

Ryanair, despite boasting Europe’s lowest per-passenger costs, faces constraints in expanding its fleet with significantly larger aircraft. While the airline continues to introduce the Boeing Max 8 and has orders for the larger Max 10, industry delays have slowed this process. In contrast, easyJet appears well-positioned to accelerate efficiency gains and profit growth, aiming for a record annual profit of approximately £700m by September.