AP NEWS
Related topics

Brit Airways To Buy Airbus Jets

August 25, 1998

TOULOUSE, France (AP) _ In the bitter rivalry between Airbus Industrie and the Boeing Co., the Europeans on Tuesday scored a sweet victory over the Americans as British Airways announced its first-ever order of Airbus jets.

The Airbus chief executive, Noel Forgeard, called it the ``crowning achievement of a successful commercial year,″ but British Airways was more blunt.

``They were significantly cheaper,″ chief executive Bob Ayling said after flying _ in an Airbus A320 _ to the European planemaker’s hometown and announcing 59 firm orders of short-haul Airbus jets and options on an additional 129.

Ayling insisted British Airways will stay a good customer to Boeing, after also announcing Tuesday it will order 16 Boeing 777s, with options for 16 more.

Some of the 777 orders replace Boeing 747 orders, however, as British Airways moves to maximize profits on some busy trans-Atlantic routes by flying slightly smaller airplanes that are easier to fill with passengers.

All told, British Airways said it was buying airplanes with a list price of 3 billion pounds ($5 billion). Airbus got about two-thirds of that business, according to an industry executive, who spoke on condition of anonymity.

Although Boeing proclaimed victory in its 777 sales, it was a day when Airbus stole the show, hosting British Prime Minister Tony Blair and French transport minister Jean-Claude Gayssot in a hangar at Blagnac Airport in southern France.

Airbus used Ayling’s jet as the backdrop, and the champagne flowed freely.

Airbus has fought for years to sell its jets to British Airways, but failed as the big British carrier stuck with Seattle-based Boeing. The only Airbus jets now flown by British Airways are 10 models acquired years ago in its takeover of a small rival carrier.

Airbus executives could barely contain their glee at winning the order for a mix of A319, A320 and A321 models after a half-year of bidding in which Forgeard said he demanded a higher purchase price than Boeing wanted for 737 models.

Airbus promised better reliability that will make the airplanes cheaper to fly over time, Forgeard said.

``We’re glad to have snatched this one away,″ Airbus spokesman Andrew Huige said. ``It’s a real feather in our cap.″

The European aviation executives and politicians conceded they need to bring their many national aerospace companies closer together to get onto a more level playing field with giant American rivals, but they insist they are getting closer.

``We look forward to the day when Airbus is the No. 1 producer of civil airlines in the world,″ Blair enthused. ``This is achievable.″

Not so fast, industry experts say.

Airbus has made impressive strides, and is enjoying a particularly good summer after a recent deal to sell wide-body jets to US Airways.

But analysts say the gains at Airbus have come only in certain segments of the market where it can compete. Boeing still has a monopoly on the lucrative jumbo jet business, where its big 747 models reign supreme.

Still, the British Airways deal may put Airbus, a consortium of companies from France, Germany, Spain and Britain, ``pretty close to parity″ in markets where it competes with Boeing, according to Paul Beaver at Jane’s Information Group in London.

``It’s a big win for them and a big loss for Boeing,″ said Paul H. Nisbet, an analyst at JSA Research Inc., a firm in Newport, R.I., that follows aviation stocks.

Airbus claims it now gets about half of the world’s airplane orders.

But Nisbet noted that Boeing has maintained a two-thirds market share for some time, when the business is measured by revenues instead of the numbers of airplanes sold.

``The number of aircraft? This can be misleading, because some of the big ones are worth five times the smallest ones,″ Nisbet said.

AP RADIO
Update hourly