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JetBlue Airways Corp. is placing a big bet on Airbus SE’s newest jetliner.
The New York-based carrier is ordering 60 of Airbus’s A220 jets, according to a statement Tuesday. The sale, valued at $5.4 billion based on list prices, is the first since the European planemaker took control of the aircraft program this month from Canada’s Bombardier Inc.
The deal ends JetBlue’s long search for a more efficient small jet to replace its Embraer SA E190 aircraft, which it relies on to ferry passengers on such routes as Boston to New York. The order also provides an immediate impetus for the A220, suggesting that Airbus will be able to entice more airlines to buy the plane formerly known as the C Series.
“This fleet transaction is a game changer for JetBlue’s economics as we progress through the next decade,” the airline’s chief financial officer, Steve Priest, said in an interview.
The transaction will give JetBlue an all-Airbus fleet, which Priest called an “undoubted advantage” because it will reduce costs for items such as parts and training for flight crews and maintenance teams. When all 60 planes are in its fleet, they will reduce the carrier’s cost for each seat mile flown by five percentage points and add about three percentage points to its pretax profit margin, Priest said.
Deliveries of the A220-300 planes are scheduled to begin in 2020. JetBlue also took an option to buy as many as 60 more of the A220-300 aircraft starting in 2025.
In addition, JetBlue made changes to its existing Airbus order book, including the conversion of an existing deal for 25 A320neo aircraft to larger A321neos. It also deferred seven A321 deliveries and moved up two by a year.
The airline said it hasn’t yet decided how many seats it will put on the A220-300, which can hold as many as 160 passengers. It also has the right to convert some orders to the smaller A220-100 plane, which can take as many as 135 seats. The Embraer E190s being replaced carry 100.
The A220-300 burns 40 percent less fuel per seat than the E190s it is replacing, has lower emissions and isn’t as loud, JetBlue said. The aircraft also is capable of flying cross-country, something JetBlue anticipates doing eventually, said Marty St. George, the carrier’s executive vice president.
The economics of the aircraft, the flexibility to alter the order and the A220-300’s range and fit into JetBlue’s network were the key factors in selecting Airbus over Embraer, Priest said.
©2018 Bloomberg L.P.
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