Aer Lingus is set to spend about $1.5 billion (€1.11 billion) doubling the size of its long-haul fleet over the next nine years. Ciarán Hancock, Business Affairs Correspondent, reports.
The airline yesterday said that it had agreed a deal with Toulouse-based aircraft maker Airbus to take delivery of six A330-300 aircraft and six A350XWBs up to 2016.
This is the biggest aircraft contract ever signed by the Irish airline. When the retirement of current aircraft is factored in, Aer Lingus's long-haul fleet will increase from seven to 14 aircraft.
No figure was given for the size of the deal. Aer Lingus said that the new aircraft were valued at $2.4 billion at catalogue prices.
Analysts, however, suggested that Aer Lingus would probably have received a discount of about 40 per cent on the list prices.
Dermot Mannion described the discount as "exceptional" and said it was the result of both Airbus and Boeing pitching aggressively for the order from the airline.
"We have taken advantage of the fact that both were very keen to do a deal with Aer Lingus," Mr Mannion said.
Mr Mannion said that Aer Lingus would seek shareholder approval at an extraordinary general meeting, which is likely to be held on July 6th, the same day that the airline hosts its annual meeting for shareholders.
The deal will require the approval of a simple majority of shareholders, making it unlikely that Ryanair, which owns 25 per cent of Aer Lingus, could block the proposal.
Mr Mannion said that he was confident the deal would be approved by investors.
The Airbus announcement comes at a time when the airline industry is under pressure in terms of fares and load factors. In the year to date, the number of passengers carried on Aer Lingus's long-haul routes is down by 0.7 per cent to 428,000.
Mr Mannion shrugged off these concerns, saying he was "encouraged" by recent traffic data.
"This is absolutely the right deal at the right time and the right place for Aer Lingus," Mr Mannion said.
The new aircraft will be more fuel-efficient and boost Aer Lingus's seat capacity. The A350 extra wide body aircraft can accommodate up to 342 passengers. At present, the maximum number of seats that Aer Lingus can offer on transatlantic routes is 327 on its A330-301s.
Mr Mannion said the new planes would be deployed on routes to the US in the medium term, although Aer Lingus would also look at possible opportunities in southern Africa and the Far East.
"This gives us tremendous scope," he said. "We have eyes to the east and the south of Ireland."
Mr Mannion said the airline's "ambition" was also to increase its short-haul fleet by 50 per cent to 42 aircraft in the coming years.
Aer Lingus also yesterday published traffic statistics for May. The number of passengers travelling on short-haul routes rose by 5.4 per cent to 718,000, while the numbers travelling long haul to the US or Dubai was up by 3.2 per cent to 94,000.
In what was another bad day for the Irish stock market, Aer Lingus's shares closed down 2.5 per cent or 70 cent at €2.73.
