JetBlue Reportedly Got a 72% Discount on its Huge A220 Order
As all bargain shoppers know, being the first in line is often a good bet. As the first buyer of the new (in name only) Airbus A220-300 jet, JetBlue received a significant discount on its July 10 order of 60 planes, according to international credit rating agency Moody’s. Both JetBlue and Airbus are keeping pricing details confidential, but analysts estimate that the deal most likely is worth $1.4-1.7 billion, which would mean an average sticker price of $23-28 million per jet. Although it’s typical for airlines to negotiate price breaks for volume orders, JetBlue’s quick order may have saved the carrier up to 72% off of the deal’s list value of $5.4 billion, according to a report by Moody’s analyst Jonathan Root.
Delivery of the aircraft will begin in 2020 with four planes, ramping up each year until JetBlue receives 22 in 2024. The airline has the option of ordering an additional 60 aircraft beginning in 2025.
Technically speaking, the Airbus A220-300 isn’t a new aircraft design. The Jet Formerly Known As the Bombardier CS300, which TPG once called “the most comfortable economy class you’ll find,” was rebranded after Airbus acquired a 50.01% stake in the Bombardier CSeries program last fall. Montreal-based Bombardier still owns 31% of the company while Investissement Québec, an investment arm of the Quebecois government, owns 19%.
With this purchase, JetBlue will become the first US carrier to fly the larger -300 variant which carries between 130-140 passengers. Delta placed an order for 75 A220-100s (formerly known as the Bombardier CS100) in April 2016. JetBlue has stated that the airline might swap part of its A220-300 order in favor of the smaller A220-100, which seats up to 120 passengers. The A220s will replace 60 of JetBlue’s Embraer E190 jets, which would have required costly upgrades over the next decade.
Bombardier’s shares shot to a nearly seven-year high as a result of Tuesday’s news, reaching $5.58 per share in early trading on the Toronto Stock Exchange Wednesday before closing at $5.43 in the afternoon session. The Canadian plane maker has experienced a tumultuous year in its dealings with the US market. Prior to the Airbus purchase in October 2017, Boeing filed a trade complaint against Bombardier earlier in 2017 for selling its planes to Delta for “absurdly low” prices. In response, the US government imposed a stiff 220% tariff of purchase price on Bombardier CSeries jets in September 2017, as well as an additional 80% levy a few days later. Although the US Commerce Department upheld the punitive 300% tariff in December 2017, the US International Trade Commission unexpectedly handed Bombardier a win over Boeing in January with a unanimous vote to eliminate the imposed tariffs.
Airbus hopes to reach “triple-digit” sales numbers by the end of 2018, sales chief David Dufrenois said Tuesday in Toulouse. Long-term, the plane maker hopes to attain at least 50% of the commercial market for 100-150 seat aircraft over the next 20 years by selling more than 3,000 planes.
Featured photo by JT Genter for The Points Guy.
Welcome to The Points Guy!
WELCOME OFFER: 80,000 Points
TPG'S BONUS VALUATION*: $1,650
CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®. Plus earn up to $50 in statement credits towards grocery store purchases within your first year of account opening.
- Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
- With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
- Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.