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Boeing Loses Huge Usair Order Airline Signs Deal To Buy Up To 400 Jets From Airbus Industrie

Muscling out No. 1 jetmaker Boeing, Europe’s Airbus on Wednesday sealed a deal to sell up to 400 jetliners to USAir in what is seen as aviation’s biggest civilian plane purchase.

Industry sources said the agreement, valued at up to $18 billion, involved heavy discounting and generous financing by Airbus, a European consortium that includes state-owned companies.

USAir, which had never bought a plane from Airbus, will purchase 120 Airbus A319s, A320s and A321s to be delivered between 1998 and 2002. The deal also includes another 120 planes to be reconfirmed, plus options for 160 additional planes.

USAir, based in Arlington, Va., wants to replace its aging fleet of midsize Boeings and McDonnell Douglas planes in the 120-190-seat range. The Airbus planes, averaging $45 million each, compete directly with Boeing’s 737.

USAir’s fleet is currently a hodgepodge of nine types of aircraft. A simplified domestic fleet would allow USAir to get more hours out of its planes and pilots, which would lower costs and boost revenue.

Those factors are important as USAir battles against low-cost competitors, such as Southwest Airlines, Delta Air Lines’ new Express operation and ValuJet, which have moved into USAir’s territory in the Northeast United States.

“The market in the eastern U.S. is moving to a lower-fare environment that brings with it increased demand,” USAir Chairman Stephen Wolf said. “These aircraft, and the flexibility we have in executing orders among aircraft types, will give us cost-efficient planes of the right size at the right time to compete aggressively in this changing market.”

Airbus’s Chief Executive Officer Jean Pierson said his company’s production flexibility was also a factor in the airline’s choice.

The companies didn’t provide a value for the contract nor give a breakdown of the numbers of each aircraft type that USAir is buying.

Aviation industry sources, speaking on condition of anonymity, noted that a bulk purchase of this magnitude, representing several years of work for the Toulouse, France-based jetmaker, almost certainly involved “aggressive” discounts from the list prices.

Industry observers said the deal was considered the largest for civilian aircraft.

USAir said it had not yet decided which engine manufacturer it would go with and also was looking into various wide-body aircraft for its international fleet.

Airbus, the world’s second-largest plane manufacturer, is a consortium among Aerospatiale of France, Daimler-Benz Aerospace Airbus GmbH of Germany, British Aerospace Plc and Construcciones Aeronauticas SA of Spain. Many Airbus planes are built of components that are manufactured in the United States.

In Seattle, Boeing Commercial Airplane Group spokeswoman Liz Verdier said her company was disappointed, but noted that USAir had been a customer for about 15 years.

“We’re not feeling like it’s a particularly big blow,” she said.

In recent months, Continental ordered 60 new 737s and Alaska Airlines ordered 12 Boeing 737s with an option to acquire up to a dozen more.

The deal is a setback not only for Boeing, but also for St. Louis-based McDonnell Douglas Corp., which has been struggling to find buyers for its 100-seat MD-95 jet. The only confirmed customer for that airplane is ValuJet, which is buying as many as 50 of the jets for $2 billion.

Douglas Aircraft spokesman Don Hanson said the company wasn’t surprised it didn’t get the USAir order.

Tags: business