June 14, 2017 / 12:08 PM / in a month

UPDATE 2-EasyJet says could replace more Airbus A320neo's with bigger plane

4 Min Read

(Adds CEO quotes on current performance, Brexit plans)

By Victoria Bryan

TOULOUSE, June 14 (Reuters) - EasyJet could look at buying more Airbus A321neo aircraft instead of smaller A320neos, the British carrier's chief executive said on Wednesday, as the firm tries to reduce costs and increase capacity on busy European routes.

EasyJet announced last month that it had arranged to convert part of an Airbus order to larger planes to cut costs per seat, and was also postponing some orders of smaller planes as it reported a bigger-than-expected half year loss.

The low-cost airline took delivery of its first A320neo jet on Wednesday, its 300th plane, with new, more fuel efficient engines.

"A 15 pct reduction in fuel burn is relevant at any fuel price," CEO Carolyn McCall said in Toulouse as the A320neo was delivered. She was referring to the fact fuel prices have fallen since the planes were ordered.

"We are able to take more A321neos in our framework but we haven't as yet committed to taking any more... It will be on our radar as we go through the next 12-18 months", she said.

EasyJet has already switched 30 of its 130 A320neo orders for larger A321neo's, which seat an additional 49 passengers and are set to bring the cost per seat down by 8-9 percent compared with the smaller plane.

The engines of the A320neo are made by CFM International, a joint venture between General Electric Co and Safran SA of France.

A rival engine made by Pratt & Whitney has suffered hardware and software problems, leading to delivery delays.

"My goodness, we're glad we choose CFM," McCall quipped.

OUTLOOK IMPROVES, BREXIT PLANS IN PLACE McCall said easyJet had had a good third quarter and that the environment was improving, with rivals not growing as fast as previously.

"Over time, that will drive yields," she told Reuters, referring to a measure of revenue per passenger.

Rivals are also switching to bigger planes. Wizz Air is shifting from the 180-seat A320 to A321s which can carry up to 239 passengers. Ryanair is set to order Boeing's proposed new 737 MAX 10 airliner, which seats up to 230 passengers and is designed to challenge the A321.

EasyJet is likely to use the larger planes to fly out of airports such as London Gatwick, Paris Orly and Amsterdam where it is hard to get new slots.

McCall told journalists she had not seen any impact on bookings from recent attacks in London and Manchester and the uncertainty created by last week's UK general election did not alter its own plans.

The carrier has applied for an operating licence in an EU member state to allow it to keep flying intra-EU routes once Britain leaves the bloc and it hopes the application will be approved this summer.

McCall said meeting EU ownership and control regulations would be no problem after Brexit because it is already 48 percent owned by someone from one of the remaining EU countries, founder Stelios Haji-Ioannou.

Elsewhere, easyJet has expressed an interest to administrators looking to sell Alitalia, but McCall said that interested parties had been asked not to comment further. (Reporting by Victoria Bryan; Editing by Elaine Hardcastle)

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