Rival airplane makers sign 4.6 billion dollars of contracts...
Airbus and Boeing, the arch rival aircraft manufacturers, sought to upstage each other yesterday with two headline-grabbing orders worth a total of $4.6 billion. Another $4 billion of orders are in the pipeline.
Boeing announced that it had won a hard fought contest with Airbus for a $2.5 billion contract to supply 11 jumbo jets to KLM, the Dutch national carrier.
It was then announced that Airbus had secured a $2.1 billion deal to supply 43 aircraft to Indian Airlines. KLM is expected to place a further order later this year, some with Airbus for the first time.
Shares in Boeing and EADS, Airbus?s parent company, rose on the announcements, which underline the airline industry?s slow recovery following the September 11 terrorist attacks.
However, aircraft prices are still depressed and other airlines, including Ryanair and easyJet, are negotiating big discounts for new aircraft.
Competition between Boeing and Airbus is intense, with each spending millions of pounds on their campaigns to win the aircraft order.
KLM is buying eight Boeing 777-200ER (extended range) passenger jets, and three 747-400ER freighters, with delivery starting in late 2003. Boeing also said that Kenya Airways had placed an order for three 777-200ER jets. ?This was a very competitive campaign for us, working long and hard, winning on merit and value,? Doug Grosclose, a Boeing vice-president, said.
KLM is still negotiating for an unknown number of other aircraft, but has indicated it may choose Airbus, which would be the first time it has ordered from the European manufacturer.
This order would be to replace 22 MD-11s and 767s. If all were replaced with equivalent Boeing and Airbus jets, the contract could be worth up to $4 billion.
Airbus also announced that it had secured an Indian Airlines order worth $2.1 million to supply its A319s, A320s and A321s over the next five years.
Airbus is still forecasting sales of about 300 aircraft this year, and the same for 2003. Boeing forecasts between 350-400 sales this year, but below this next year.
The industry had feared that demand for new aircraft would slump because there are some 2,000 aircraft lying idle, many parked on sites in deserts, and airlines have cancelled scores of orders.
Nick Cunningham, aviation analyst at Salomon Smith Barney, said he was seeing a particularly strong pick-up in orders from airlines in Asia. ?Asian state carriers are not driven by the same GDP and demand cycle as commercial airlines, and there is intrinsic growth in their markets.? However, Britain?s low-cost carriers, whose passenger numbers have grown since September 11, have also placed orders.
Go, the airline sold off by British Airways, is to order up to 80 aircraft for $3 billion from either Boeing or Airbus. Ryanair and easyJet have announced they may buy up to 100 new aircraft each.
The orders point to strong bounce-back after the dire warnings following September 11, which forced Boeing to announce it would have to make up to 30,000 job cuts.