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Frontier to buy US$1.3b of Airbus jets featuring more seats

Tuesday, June 2, 2015 - 12:27
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Frontier Airlines Inc will buy 12 Airbus Group NV single-aisle jets valued at $1.3 billion to replace its smallest, oldest planes with larger models that boast more seats.

[DALLAS] Frontier Airlines Inc will buy 12 Airbus Group NV single-aisle jets valued at $1.3 billion to replace its smallest, oldest planes with larger models that boast more seats.

The aircraft will let Frontier accelerate moving out its Airbus A319s ahead of receiving other deliveries already on order, Chief Executive Officer Barry Biffle said in an interview on Monday. Including the latest purchase, Frontier's fleet will grow 80 per cent over five years to 101 planes.

The changes help curb expenses by putting more people on each plane, a pillar of Frontier's shift to becoming a so-called ultra-low cost airline with discounted base fares and charges for any extras, like carry-on bags. Flying bigger jets puts Frontier, majority-owned by private-equity firm Indigo Partners, in the midst of an industry trend while also increasing the supply of seats on each of the airline's routes.

"Our plans are to be the lowest-cost carrier in the US," Mr Biffle said. "In order to do that, you have to be as efficient as possible." The order will consist of 10 A321s and two A320s. The former are Airbus's biggest narrow-bodies, and their 230 seats are 67 per cent more than on an A319. The A320s will have 186 seats. Frontier's current A320s have 168 seats, according to Seatguru.com.

"From a cost perspective, the change is massive," Mr Biffle said. The more seats on a plane, the less it costs to operate on the basis of each seat flown one mile, an industry measure of efficiency. Frontier will retain its 24-seat Stretch section that offers more legroom.

The two A320s will be delivered next year and the A321s in 2016 and 2017, said Chief Financial Officer Paul Dempsey.

Frontier, which hasn't expanded seating capacity in a decade because of bankruptcy and two changes in ownership, expects to average 15 per cent annual growth over the next several years with the planes in the combined orders, Mr Dempsey said.

"We would have had some challenges in the next two years, where our fleet might have either been not growing year-over- year or might have temporary periods of shrinking" without the incremental order, Mr Biffle said.

Each A321 carries a list price of US$113.7 million, while the A320s are valued at US$97 million apiece, according to Airbus. Airlines that buy multiple planes usually negotiate discounts. The planes' engines will be made by CFM International, a joint venture of General Electric Co and France's Safran SA.

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