Posted on: 14 September 2015 by Mark Howells
After entering into a memorandum of understanding with Airbus on 18 June, 2015, Wizz Air has completed the purchase agreement (New Airbus Agreement) for 110 A321neo aircraft from the OEM, enabling the carrier to deliver on its fleet replacement and expansion plans alongside its current strategy of operating an all-Airbus A320 family fleet.
At current list prices, the order for 110 A321neos is valued in excess of US$13.7 billion, although Airbus has granted significant discounts from list prices to Wizz Air. Under the New Airbus Agreement, the airline will retain flexibility in determining the most favourable method of financing the aircraft.
However, given the size of the commitments, the purchase constitutes a ‘class 1 transaction’ under the
Listing Rules and therefore entry into the New Airbus Agreement is conditional upon Wizz Air shareholder approval, which will be sought at a general meeting in due course.
The New Airbus Agreement schedules the 110 Airbus A321neos for delivery between 2019 and 2024 (inclusive), but Wizz Air has negotiated a significant amount of flexibility with Airbus to ensure the aircraft delivery stream matches its operational needs, including the ability to substitute a certain number of A321neo aircraft with the same number of A320neo aircraft.
Of the 110 aircraft to be delivered to Wizz Air under the New Airbus Agreement, 51 aircraft will be for the planned replacement of existing aircraft when they are returned to lessors or sold across the same six year period. Under the terms of the New Airbus Agreement, the Company is required to select the engines to be installed on the new aircraft by 31 December 2016.
The New Airbus Agreement also provides purchase rights for an additional 90 A321neo aircraft which can be exercised in four batches by June 2017, June 2018, June 2019 and June 2020 respectively.
The airline also has an outstanding commitment to purchase a further 48 aircraft from Airbus, comprising 21 A320ceo aircraft and 27 A321ceo aircraft (Existing Order). The first Wizz Air A321ceo aircraft will enter service in November 2015 and will be equipped with 230 seats. All aircraft under the Existing Order are scheduled for delivery by 2018. However, under an amendment agreement entered into today (which is conditional on the New Airbus Agreement coming into force), ten A320ceo aircraft currently scheduled for delivery in 2018 under the Existing Order will be cancelled.
“We are pleased to confirm this order with Airbus to purchase 110 A321 neo aircraft. This order will help us to build on our strong market position in Central and Eastern Europe. It also provides significant flexibility to match our fleet to our growth requirements. The new aircraft will enable us to sustain our cost advantage through cabin innovations, the latest engine technology and other efficiency improvements, while enhancing our customer offering and experience,” explained Wizz Air’s CEO, József Váradi. “Airbus is a key partner for us and we believe they have the best aircraft to serve our markets and we are happy to be continuing our longstanding relationship with them.”