March 19, 2013 in Business

Airbus signs biggest sales contract to date

Firm to make Lion Air 234 planes
Associated Press
 
Associated Press photo

Airbus CEO Fabrice Bregier, right, hands an Airbus 320 model to Lion Air CEO Rusdi Kirana, left, while France’s President Francois Hollande stands behind during a signing ceremony at the Elysee Palace in Paris on Monday.
(Full-size photo)

PARIS – Airbus signed its biggest deal ever on Monday, an order from Indonesia’s Lion Air worth $24 billion that President Francois Hollande said should inspire the struggling French economy and all of Europe.

The CEOs of both companies signed the contract for 234 planes in a ceremony at the French presidential palace, a sign of its importance to the government. At a time when layoff announcements are streaming out of French companies and unemployment is over 10 percent, Airbus said it would manufacture the planes in France and would involve 5,000 employees there.

“Airbus is a national and European pride, one of the pillars of our economy,” Hollande told reporters. “The big Airbus contracts are an example for our economy, what it can do, what it must do.”

Lion Air is buying 169 A320s and 65 A321 jets. The first planes will be delivered in 2014, and most of them will be outfitted with a new, more fuel-efficient engine that Airbus has recently developed.

The airline is a major player in the Indonesian market and also gave Boeing its largest-ever order when it finalized a deal last year for 230 planes from the Chicago airplane manufacturer.

Boeing is the archrival of Airbus, which is the civilian aircraft business of the European aerospace and defense company EADS. Some of the planes Lion Air bought from Boeing are the direct competitors to the aircraft it is buying from Airbus.

Both companies receive significant state support that is key to their success. That support is both financial – France, Germany and Spain are all shareholders in Airbus parent EADS – and more intangible, like Monday’s use of the Elysee Palace to hold a news conference.

Hollande said the success of Airbus should also inspire European countries to cooperate in other sectors.

Lion Air is a low-cost carrier that holds about a 45 percent market share in Indonesia, a sprawling archipelago that’s seeing a boom in both economic growth and air travel. Dozens of airlines have emerged in Indonesia since it deregulated its aviation industry in the 1990s, making air travel affordable for the first time for many of the country’s 240 million people.

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