EasyJet invests millions in Airbus jets

EasyJet CEO Carolyn McCall has already made known her intentions of going head to head with rival carriers on shorter routes, something that will require them to acquire 135 Airbus SAS jets. The deal, worth $13 billion, has already been approved by the shareholders of the company with 57 percent voting in favour of McCall’s plans.

The ballot held at Luton, England, base of the carrier is significant considering it overcame stiff opposition from the founder and the biggest investor in the carrier Stelios Haji-Ioannou. Stelios claimed the plan is fraught with risks and could have negatively impact the dividend prospects of the company though he has also predicted on July 1 that it is McCall that will have the last laugh on this.

The shareholder’s approving of McCall’s plans to purchase the additional jets can be seen as further support for the CEO’s plans to eat into the market share of other carriers such as Air France and Deutsche Lufthansa AG (LHA).

This however will entail moving further away from the discount oriented approach that the founder had visualized with EasyJet. The carrier has been increasingly adopting a model where it is seen deviating from its discount airlines model to offering ancillary services like a flexible ticketing scheme to lure business travellers.

Chairman John Barton though has stressed on the need to remain affordable while offering the best of services. The plan to acquire more aircraft got passed after securing excess of 193 million votes while 144 million votes were recorded against the move in a process that saw the participation of 85 percent voters.

346,000 withheld from the voting process. The orders for 135 more jets were announced last month during the Paris Air Show though it was subject to shareholder’s approval. A Dublin-based analyst at Goodbody Stockbrokers, Donal O’Neill is seeing a lot of potential in the deal. He is claiming the airline can seize considerable market share after tapping into the lucrative business routes and is recommending buying the airline’s stocks.

M&G Investments that belongs to Prudential Plc (PRU) backed McCall’s plans though they had supported Stelios last August when the latter had tried to overthrow the then chairman, Michael Rake. M&G Investments own 5 percent of EasyJet stocks.