Boeing and Airbus sell 77 jets for $7.2 billion Industry expecting slower days ahead


September 09, 1998|By BLOOMBERG NEWS

FARNBOROUGH, England -- Boeing Co. and Airbus Industrie won orders for 77 jetliners valued at a collective $7.2 billion, splitting what analysts say could be one of the industry's last big deals for several years.

Boeing won an order valued at $2.7 billion from Brazilian carrier Varig for up to 39 of its 737, 767 and 777 jets, and another valued at $205.5 million for six business jets.

Airbus will deliver up to 10 long-range A340-500 jets and six A320 short-haul planes to International Lease Finance Corp. (ILFC), a Los Angeles-based airplane-leasing company, and as many as 16 A340s to Emirates Airlines in orders valued at $4.3 billion.

After a three-year surge in aircraft orders fueled by buoyant economies, industry executives warn that growth is slowing because of recessions in Asian nations and slowing economies in the United States and elsewhere. Most of the jets won't be delivered until after 2002, a sign that airlines expect a slump.

"The next three to four years is not the time for huge orders of aircraft," said Chris Partridge, associate director of aviation finance at Deutsche Bank in London. "This market has peaked, and the Asian crisis is starting to spread."

ILFC, a unit of American International Group Inc., said it is betting on a buoyant air traffic market by 2002 that would include "a strong recovery in Asia." Regional traffic in that market has plunged amid an economic slump.

Varig, the largest airline in Latin America, placed firm orders for 24 Boeing jetliners: six extended-range 767-300s; four long-range 777s, which carry more passengers than 767s; and 14 updated 737 jetliners. Varig took options on four 777-200s and 11 next-generation 737s.

Seattle-based Boeing also said it won orders for six 737-700s modified for corporate executives and carrying a $34.25 million list price.

The deals were announced at the Farnborough International Air Show.

Boeing has raised list prices by 5 percent this year, and Airbus said yesterday that it would raise its list prices 3 percent, largely symbolic measures meant to reassure shareholders since neither ever sells planes at the list price.

Boeing's profit margins on commercial jet sales, once in the double digits, have dropped to about 3 percent while.

Airbus, the consortium of companies from France, Britain, Germany and Spain, saw its earnings plunge 61 percent to $147 million last year.

Pub Date: 9/09/98

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