JetBlue & WestJet founder plans to launch a new U.S. airline by 2021

David Neeleman, the founder of JetBlue and WestJet airlines, has reportedly announced the decision to buy 60 Airbus A220-300 aircraft for a new U.S. airline, supposedly ready for a launch. The memorandum of understanding for the aircraft was released at the Farnborough Airshow in southern England.

Presently, the airline is being referred to as ‘Moxy’, in most of the investor presentations. As per sources, the deliveries of these 60 aircrafts are to begin in 2021. Incidentally, the delivery would be due a year prior to when the planes are anticipated to pan out from a new assembly line in Mobile, Ala. David Neeleman was quoted stating that after years of U.S. airline consolidation, the conditions are now improving for a new generation of U.S. airlines to emerge, that would exclusively concentrate on passenger service and satisfaction.

The list price of the deal is estimated to be USD 5.4 billion. According to the information obtained from a leading credit rating business, JetBlue will pay between USD 23 million to USD 28 million per aircraft for a total price between USD 1.4 billion and USD 1.7 billion. Apparently, this entails a 66% to 72% discount from the list price.

Sources claim that the A220-300 has 140 and 160 passenger seats with the capacity of flying transcontinental routes. The spacious overhead bins and a 2-by-3 seating arrangement minimizes the number of middle seats.

Walter Spracklin, analyst, RBC Capital Market, has been quoted stating that aircraft program has been amassing considerable momentum with the order from JetBlue as well as Neeleman’s commitment. Apparently, Spracklin also expects that the joint venture will continue to win orders of a meaningful size with long term valuation implication, solely owing to Bombardier’s 34% stake.

For the record, David Neeleman is also a prominent investor in TAP in Portugal and a controlling shareholder in Azul airlines, Brazil.