JetBlue cites favourable pricing in A320neo order

Washington DC
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Management at JetBlue Airways believes the carrier timed its commitment for 40 Airbus A320neos "very well", and "secured excellent pricing" for the aircraft.

JetBlue CFO Ed Barnes offered that assessment during a 21 June analysts call outlining the A320neo order and a slew of other fleet adjustments starting in 2013.

Barnes stated that during JetBlue's negotiations with its aircraft suppliers Airbus and Embraer to adjust its fleet, the carrier needed to ensure any agreements forged would not detract from the carrier's liquidity position or strength of its balance sheet.

JetBlue expects "minimum cash expenditure" for the 40 A320neos during the next few years, Barnes stressed, noting the carrier would be responsible for seven million upon formal execution of the order.

The carrier's fleet adjustments entail the incremental A320neo order, a deferral of eight deliveries from its existing A320 orders from 2014-15 to 2017 and an effort to optimise its Embraer E-190 fleet to 75 aircraft, which entails "mitigating" 25 aircraft of the subfleet.

Barnes estimated JetBlue's fleet adjustments should reduce its aircraft purchase obligations by more than $800 million through 2016.

At the same time JetBlue has opted to convert 30 of its existing 52 A320 firm orders to the A321. All of JetBlue's new aircraft deliveries from 2013 will feature fuel saving sharklets first unveiled by Airbus in 2008.

Outlining the logic for the switch to the A321, Barnes explained the aircraft provides 20-25% greater seat capacity than the A320, but produces a lower cost per available seat mile. Barnes also stressed even though the A321 has a higher fuel burn compared with the A320, on a per seat basis the A321 has a 12% lower fuel consumption than the A320.

The A321 also underscores JetBlue's strategy to more cost effectively serve higher density markets, particularly from its New York JFK base to Florida and the Caribbean, while also providing the carrier flexibility at its slot constrained airports -- JFK, and New York Newark, said Barnes.

JetBlue chief commercial officer Robin Hayes also remarked that the A321s with sharklets and auxiliary fuel tanks also offer marginally better performance than current A320s on US transcontinental routes.

JetBlue is scheduled to take deliveries of its first A321s in 2013, when it is scheduled to accept three aircraft.