Aircraft Negotiations

easyJet PLC
14 October 2002

Monday, October 14, 2002

For immediate release



easyJet selects Airbus as preferred supplier for 120 new aircraft



easyJet plc ('easyJet'), Europe's leading low-cost airline, today announced that
it had selected Airbus as the preferred supplier for 120 A319 aircraft, with
options with price protection on a further 120 A319s.



easyJet has granted Airbus exclusivity for 45 days to agree documentation. The
agreement in principle is subject to contract.  The detailed terms are subject
to confidentiality restrictions and any final agreement will be subject to
shareholder approval.



Key points of the deal:

  • Firm order for 120 Airbus A319 aircraft for delivery from September 2003
    over 5 years
  • Options with price protection on a further 120 Airbus A319 aircraft until
    2012
  • Airbus A319 will be configured with 150 seats, with the possibility of
    increasing to 156, compared to 149 on the Boeing 737-700
  • Options for larger sized Airbus A320 and Airbus A321 at pre-agreed prices



It is expected that the final contract would provide easyJet with a number of
significant financial benefits:

  • easyJet estimates substantial savings, compared to buying additional
    B737-700s today
  • easyJet estimates the A319 would achieve an approximate 10% improvement
    per aircraft over the existing Boeing 737 operating cost base (measured per
    available seat kilometre)
  • Airbus to provide extensive support so that the introduction of the A319
    to be no more expensive than the B737-700 in the first two years
  • Airbus backed maintenance program means cost not higher than Boeing
  • Airbus assistance reduces residual value risk on remaining 10 owned
    B737-300s



Introduction of new aircraft:

  • A319s will be introduced initially via easyJet's Geneva base from August
    2003 operating under easyJet's Swiss air operator's licence
  • Eventually both the Airbus A319s and Boeing 737-700s will be
    interchangeable on all easyJet routes maintaining the 'any aircraft, any
    route' aspect of the easyJet business model



Stelios Haji-Ioannou, easyJet Chairman, said:



'As easyJet's largest single shareholder, I was faced with the dilemma of either
following the conventional wisdom in the marketplace in order to keep
shareholders happy in the short term, or doing what's right for all shareholders
in the long run.

We, at the Board, decided to do what's right. We refused to overpay in order to
improve the stock price in the short term. It should be an offence to mis-use
that level of corporate resources.



'At the end of the day 'low cost' companies remain 'low cost' by not wasting
money. Sticking to old-fashioned fads like 'low cost airlines only fly Boeing'
does not reduce costs. This order is big enough to be put to a vote by all
shareholders. I will personally spend a lot of my time over the next couple of
weeks along with the CEO and the Chairman-elect talking to our shareholders in
order to explain the benefits of this deal. Having looked at several reference
points on aircraft pricing including our own 44 Boeings, the offers Go Fly had
received before the acquisition and the Ryanair deal, I am satisfied we have
done the right thing by waiting. Having acquired Go Fly, one of the very few
other potential buyers of significant numbers of aircraft, we have exploited the
contestable market to its full potential. About four years ago, as a small
airline we bought 15 B737-700s with no competition.  Today, buying 120 aircraft
in a competitive market, we can now purchase aircraft at approximately 30% per
seat below the prices, adjusted for inflation, we achieved then.



'I have also followed the great success JetBlue have experienced with the Airbus
product in the US.  It offers an excellent, comfortable cabin for passengers,
exceptional reliability and low fuel burn. The wider aisle also means faster
boarding and deplaning, and therefore quick turnarounds. We also like the sizing
of the A320 family, which allows us to graduate up to the 180 seat A320 and even
220 seat A321, if we choose to do so in the future.'





Ray Webster, easyJet Chief Executive, said:



'After exhaustive research and several rounds of negotiation with both Airbus
and Boeing, the Board is convinced that we have achieved a tremendous deal which
will produce a step-change reduction in our cost base.



'Airbus has demonstrated an enthusiasm to do business with us which is unmatched
in my experience.



'We believe that the overall deal which they have offered us, together with
their willingness to support the costs of introducing a new aircraft type to our
fleet far outweigh the costs of the complexity of running a dual fleet.'



Noel Forgeard, President and Chief Executive of Airbus, said that he was
immensely gratified with easyJet's decision:



'The A319 will do an outstanding job for easyJet, providing its passengers with
more comfort, higher reliability and, with its unbeatable operating economics,
the opportunity for lower fares. We are very excited at entering into a long
term partnership with one of the world's most dynamic, low cost airlines.'



ENDS



There will be a meeting for analysts at 08.45 this morning at the offices of UBS
Warburg at 1 Finsbury Avenue, London, EC2M 2PP



There will be a press conference at 10.30 this morning at the offices of UBS
Warburg at 1 Finsbury Avenue, London, EC2M 2PP



There will be a conference call for fund managers and analysts this afternoon at
14.30 London time. For further details please contact Catherine Segrave at UBS
Warburg on [phone]





easyJet plc


Toby Nicol, Corporate Communications Manager         [phone]
Chris Walton, Finance Director                       [phone]
Derek Livingstone, Investor Relations Manager        [phone]



For easyJet media enquiries please contact:


Grandfield
Charles Cook/Gareth Penn                             [phone]




Airbus Corporate Communication                       [phone]





Notes to editors



easyJet currently operates a fleet of 64 Boeing 737 aircraft (both -300 and -700
variants), operating on 83 routes to 35 airports and in the 12 months to end
September easyJet and Go Fly carried a combined 16m passengers.



The A319 is a member of the A320 Family, which consists of the A318, A319, A320
and A321, the world's fastest selling single-aisle family.



A leading aircraft manufacturer with the most modern and comprehensive product
line on the market, Airbus is a global company with design and manufacturing
facilities in France, Germany, the UK, and Spain as well as subsidiaries in the
US, China and Japan. Headquartered in Toulouse, France, Airbus is an EADS joint
company with BAE SYSTEMS.







This announcement contains certain forward-looking statements with respect to
the financial condition, results of operations, and business of easyJet plc.
These statements and forecasts involve risk and uncertainty because they relate
to events and depend upon circumstances that will occur in the future. There are
a number of factors which could cause actual results or developments to differ
materially from those expressed or implied by these forward looking statements
and forecasts. The statements have been made with reference to forecast price
changes, economic conditions and the current regulatory environment. Nothing in
this announcement should be construed as a profit forecast, and easyJet plc
assumes no liability whatsoever to update these forward-looking statements or to
conform them to future events or developments.



END


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