JetBlue Airways Corp. is placing a big bet on Airbus SE’s newest jetliner.
The carrier is ordering 60 of Airbus’s A220 jets, the freshly rechristened plane formerly known as Bombardier Inc.’s C Series. Tuesday’s sale, valued at $5.4 billion based on list prices before customary discounts, is the first since Airbus took control of the aircraft program last week from Bombardier, stated a Bloomberg report.
The deal caps 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.
“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 to Bloomberg.
For Airbus, quickly racking up orders for the A220 is a crucial challenge as the Toulouse, France-based company seeks to lower costs. To make the aircraft viable, the planemaker says it needs a “double-digit” reduction in costs in its supply chain and is in the process of negotiating with suppliers.
For JetBlue, the transaction will yield an all-Airbus fleet, which Priest called an “undoubted advantage” because it will reduce costs for items such as parts and training. When all 60 planes are in its fleet, they will reduce the carrier’s annual 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 said in a statement. The New York-based carrier also took an option to buy as many as 60 more starting in 2025.