Air­bus close to land­ing €14bn deal for jet­lin­ers

Irish Independent - Business Week - - BUSINESSWEEK - Julie Johns­son, Anurag Ko­toky and Ben­jamin Katz

AIR­BUS is on the verge of se­cur­ing an or­der for 45 of its A350-900 wide-body jet­lin­ers – a crit­i­cal win af­ter a run of de­fer­rals by US car­ri­ers.

The deal would be val­ued at $14bn (€11.7bn) be­fore dis­counts, ac­cord­ing to the peo­ple, who asked not to be iden­ti­fied as the talks are pri­vate. The or­der is likely to be placed by United Con­ti­nen­tal Hold­ings to con­vert an ear­lier $12.6bn deal for 35 of the big­ger -1000 vari­ant, based on cur­rent list prices, the peo­ple said.

Air­bus de­clined to com­ment on dis­cus­sions with cus­tomers. United, which is seek­ing to re­new its fleet of ag­ing Boe­ing 747 and 777 wide-body planes, was un­avail­able to com­ment out­side nor­mal busi­ness hours.

The ex­panded or­der comes af­ter Amer­i­can Air­lines Group and Delta Air Lines both put off de­liv­er­ies of the mar­quee Air­bus jet­liner amid con­cern about the risk of op­er­at­ing larger planes. Chicago-based United has said it’s re­view­ing its A350 or­der af­ter in­def­i­nitely post­pon­ing de­liv­ery of four jets orig­i­nally due for de­liv­ery this year. Re­tain­ing United as a wide-body cus­tomer is cru­cial for Toulouse-based Air­bus as it seeks to ex­pand twin-aisle sales in Boe­ing’s home mar­ket.

The deal would lift Air­bus’s back­log for the 325-seat A350900 to 673 air­craft, while nar­row­ing the or­der book for the 366-seat -1000 to 177, based on the plane­maker’s lat­est or­der and de­liv­ery tal­lies. That un­der­scores the pres­sure on big­ger wide-body jets as car­ri­ers around the world rein in ca­pac­ity ex­pan­sion to ease pres­sure on fares.

United is the sec­ond-largest cus­tomer of the largest A350 model be­hind Qatar Air­ways, which re­cently scrapped or­ders for four -900 jets due to sup­plier de­lays. Delta said in May it would de­fer 10 or­ders for the jet and in­stead take a stretched ver­sion of Air­bus’s A320 sin­gle-aisle work­horse. Mean­while, Amer­i­can has post­poned de­liv­er­ies of 22 jets.

United’s fleet strat­egy has been in flux since Pres­i­dent Scott Kirby ar­rived last year from Amer­i­can Air­lines, where he had helped ne­go­ti­ate a pur­chase of the Air­bus jet­liner. The orig­i­nal deal pre-dates the car­rier’s 2010 merger with Con­ti­nen­tal and was United’s first or­der for an Air­bus wide­body.

The next-gen­er­a­tion jet is made of car­bon-com­pos­ite panel and is crit­i­cal to Air­bus’s ef­forts to com­pete with Chicago-based Boe­ing’s smaller 787 Dream­liner and the big­ger 777X, the first twin-en­gine plane built to haul more than 400 pas­sen­gers. (Bloomberg)

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