Boeing loses part of jet order British Airways to buy at least 59 planes from Airbus Industrie

August 25, 1998|By SEATTLE POST-INTELLIGENCER

In what is seen in Europe as a history-making deal that will be trumpeted at a news conference today by British Prime Minister Tony Blair, British Airways has decided to buy 59 narrow-body planes from Boeing rival Airbus Industrie, with options for as many as 129 more planes.

But Europe's largest airline also will buy 16 of Boeing's 777 widebody jets, with options for 16 more. And British Airways is expected to say it remains committed to buying Boeing's widebody jets for its long-haul fleet for at least the next decade, people familiar with today's announcement said. With options, the Boeing order is potentially worth more than $5 billion.

"We fought hard for this deal," said a Boeing source close to the talks with British Airways. "It's disappointing to lose, but we are happy with the widebody order."

And some analysts are saying Boeing's loss could actually signal a positive change for the profit-starved Seattle aerospace giant.

In terms of value, the firm orders won by Airbus for its 59 smaller jets is worth about $2.7 billion at list prices, or about the same as the 16 firm orders for the more expensive 777. The 777 ranges in list price from about $130 million to $170 million, depending on the model and configuration.

At least in Europe, the Boeing order will be overshadowed by the Airbus victory because this is the first time that British Airways has opted to buy commercial jets from a manufacturer other than Boeing.

"Obviously, Boeing would have liked to have won both orders [for the widebody and narrow-body planes], but given a choice, I'm sure Boeing would rather have the 777 orders," said aerospace analyst Paul Nisbet of JSA Research.

Nisbet and several other industry analysts said that losing the order to Airbus for smaller planes could actually benefit Boeing in the long run as it works through its current production difficulties and returns to profitability. (Boeing posted an operating loss last year for the first time in a half-century.)

That's because Airbus and Boeing have been engaged in a price war that continues to hurt Boeing's bottom line. The steep double-digit discounts that Boeing has offered many customers have all but eliminated the profit margins it once enjoyed.

Boeing would not comment on the expected 777 order from British Airways. "We let our customers announce orders first," said Boeing spokesman Scott Battishill.

Neither British Airways nor Airbus would publicly comment on their deal to be announced today.

Airbus officials said Prime Minister Blair will speak at a joint news conference with Airbus President Noel Forgeard this afternoon at Airbus headquarters in Toulouse, France.

Industry sources said British Airways will order a mix of Airbus planes, including the A319, A320 and A321 models.

The 150-seat A320 has a list price of $45 million to $48 million. The shorter A319 sells for about $5 million less. The A321, a stretch version of the A320, has a list price between $55 million and $58 million.

Pub Date: 8/25/98

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.