June 19, 2007 in Business

The chase is on, with Airbus in the lead

Jane Wardell Associated Press
 
Associated Press photo

A bird flies away as the Dassault jet fighter Rafale performs a demonstration flight Monday, the first day of the 47th Paris Air Show in Le Bourget, north of Paris. Associated Press
(Full-size photo)

LE BOURGET, France – Airbus racked up a series of big orders at the opening Monday of the world’s biggest air show, stealing some early limelight from U.S. rival Boeing Co.

With the manufacturers’ intense competition again expected to be a dominant theme of the weeklong show at Le Bourget, north of Paris, both looked to make a splash from the get-go, with billions of dollars worth of orders announced.

Airbus booked orders from US Airways, Qatar Airlines, Emirates, Jazeera Airways and Nouvelair for a raft of planes, including its problem-plagued A350 and superjumbo A380 models.

Airbus sales chief John Leahy predicted Monday that the plane maker will land more than 280 orders over the week – airplane manufacturers often reserve big announcements for the show to ensure maximum impact.

At the last Le Bourget show in 2005, Airbus announced orders worth $33.5 billion, more than double Boeing’s $15 billion, based on list prices – which are usually discounted for the deals.

Leahy noted that Airbus racked up 280 “announcements” – including memorandums of understanding and other agreements that were not firm orders – two years ago.

“I would expect to exceed that this year, by how much it will exceed, why don’t we wait until Friday to see,” he said.

US Airways Group Inc. was one of the first to announce an order Monday, saying it had agreed to terms on 60 of Airbus’ A320 single-aisle aircraft and 32 wide-body aircraft, including the redesigned A350s, boosting the total for A350s from a previously announced 20 to 22.

In another major order for the Toulouse-based company, GE Commercial Aviation Services ordered 60 of the A320 family aircraft in a deal worth around $4.4 billion at list prices.

Qatar ordered 80 A350 XWBs, three A380s and three A320 family aircraft. The A350 order was a confirmation of Qatar’s earlier commitments to buy the 80 jets. Qatar Airways Chief Executive Akbar Al Baker said the order for the A350s is worth $16 billion.

Two of the orders for the A380, Airbus’s flagship double-decker plane, are conversions of earlier options into firm orders, he said, and the airline is taking one new order, bringing its total order for A380s to five. The three firm orders together are worth about $750 million, he said.

Wiring and other technical problems are behind a costly two-year delay in delivery of the A380. The holdup is set to cut profit by 4.8 billion euros ($6.2 billion) for Airbus parent European Aeronautic Defense & Space Co. NV over the next four years.

Emirates is by far the biggest single customer for the A380. It initially ordered 43 A380s and took another four in May. Emirates is believed to have obtained significantly improved financial terms for these aircraft and the latest batch of eight.

Jazeera Airways signed an order for 30 single-aisle A320 jets worth between $2.1 billion and $2.4 billion based on list prices.

Another two orders for the A320 aircraft came from Nouvelair, a Tunisian charter airline based at Monastir that belongs to the Tunisian Travel Service group.

Emirates ordered an additional eight A380s, a deal estimated to be worth about $2.5 billion. The latest order brings to 55 the number of A380s ordered by the Dubai-based airline.

However, Emirates remained undecided about whether it will sign up for Boeing’s new 787 Dreamliner or its wide-bodied Airbus rival, the A350 WXB.

“We’ve got some talking to do to both Boeing and Airbus with regard to the commercial terms of the deal, but I think we’re in a good position to make an aircraft decision in the next few months,” said Emirates President Tim Clark.

Clark said the carrier would select only one of the aircraft, rather than buying some of each.

Airbus was forced last year to launch a costly redesign of the planned A350 after airlines scorned its earlier model – resulting in the extra-wide-body or XWB model – and is having to renegotiate existing orders.

Prior to Monday’s orders, Airbus had only 13 firm orders for the mid-size, long-range plane, compared with 584 orders for Chicago-based Boeing’s Dreamliner – the first commercial jet made of light, sturdy, carbon-fiber composites instead of aluminum.

Scott Carson, the head of Boeing Commercial Airplanes, said Monday that the Dreamliner was on track for test flights in August or September, and delivery to its first customers in May.

Carson also announced Monday that GE Commercial Aviation Services had ordered six of its 777 freighters, worth $1.42 billion at list prices. The order takes the number of 777s ordered by GECAS to 39, including 14 freighters.

In another deal for Boeing, Jakarta-based Lion Air ordered an additional 40 737-900ER planes. Valued at more than $3 billion at list prices, that brings Lion Air’s combined orders for the 737-900ER to 100.

The Paris show comes amid revived fortunes for the commercial airline industry. After two years in the red, the industry will make a profit of just over $5 billion this year, despite rising fuel costs, says the International Air Transport Association, whose 250 members claim to represent 94 percent of international air traffic.

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