Airbus gets $7.5 bln order from Singapore Airlines
Monday, July 24, 2006, 12:02
Airbus SAS, trailing Boeing Co. In orders this year, won a contract from Singapore Airlines Ltd. For A380 superjumbos and the new A350 XWB, giving the aircraft maker its first order for the plane unveiled this week. The deal is worth an estimated $7.5 billion. Singapore Airlines, Asia's most profitable carrier and an industry bellwether for aircraft purchases, topped off its existing order for 10 A380s with nine more A380s, and it also ordered 20 A350 XWBs. In addition, it has options to buy 20 more A350s and six more A380s. It plans to lease 19 A330-300s from Airbus. The A350 deliveries start in 2012. „This is extremely welcome news for Airbus,” said Richard Aboulafia, vice president of the Teal Group, a Fairfax, Virginia-based consulting company. „They relaunched the A350 to attract a blue chip customer and the market rewarded them. This also implies forgiveness for the A380 production snafu, and a clear market desire to keep Airbus as a strong widebody player.” The A350 XWB aircraft may give Airbus a better chance against Boeing in the market for planes seating 250 to 300 passengers, which will be worth about $450 billion over 20 years, according to a Teal Group estimate. Singapore Airlines' latest order comes after the carrier in June announced a commitment to buy 20 787-9s from Chicago-based Boeing worth $4.52 billion.
Singapore has signed a letter of intent for the purchases and is expected to give a firm signature in coming months, said Airbus Chief Commercial Officer John Leahy. „This is a re-endorsement of the A380 program by one of our first and most prestigious customers,” said Leahy in an interview at the Farnborough, England, air show today. Leahy said Singapore's preferences were included in Airbus's redesign of the A350XWB, which, he said, is now „a step beyond the 787.” Leahy declined to comment on whether the purchase price of the new order included penalty payments from Airbus to Singapore for late deliveries on the A380. Singapore will get its first A380 in December, as scheduled, though later deliveries will be delayed by as much as a year.
Boeing is still running ahead of Airbus this year on new orders after Airbus beat Boeing on new orders in the last five years. Airbus received contracts for 117 planes in the first six months of the year, a quarter of the 480 total received by Chicago-based Boeing. Airbus developed the $13 billion A380 to help preserve its position as the world's biggest commercial planemaker ahead of Boeing. Airbus parent EADS lost a quarter of its market value on June 14 after saying the delays would reduce earnings by €2 billion ($2.5 billion) through 2010. The latest orders from Airbus and Boeing „will position the airline well for the future growth and uphold our policy of continuous fleet renewal and modernization,” Singapore Airlines Chief Executive Officer Chew Choon Seng said in a statement. Singapore Airlines will also lease 19 A330-300 aircraft for delivery from early 2009 to fill the airline's capacity requirement until the delivery of the new aircraft. The $7.5 billion estimated value of the 29 Airbus planes is based on catalog prices.
Singapore Airlines has yet to choose the engine for its latest order. The new planes will allow the carrier to operate routes to Europe, Australia, the Middle East and east Asia. Airbus won firm orders for only 100 of an earlier version of the A350 compared with 360 for Boeing's 787, a carbon-fiber aircraft that is lighter and more fuel-efficient than normal aluminum planes. Singapore Airlines said on June 14 it has the purchase rights to buy 20 more Boeing 787-9 planes. Airbus today also won a commitment from Blue Wings AG, a German low-cost airline backed by Russian investors, for 20 airplanes worth about $1.4 billion as the carrier plans to expand into Russia and other parts of the former Soviet Union. They have firm orders from: India's Go Air for 10 A320s, first announced as a commitment in February; Air Caraibes for an A330-300; a private customer for the Airbus corporate jet, based on the A319; Aegean Airlines for three A320s; International Lease Finance Corp. for six A320s; Malaysia's Air Asia for four A320s; CIT Group Inc. for five A330-200s and four A320s; and Wizz Air for 20 A320s. Commitments include one for three A319s and six A320s from Libya's Afriqiyah; 12 A330-200s from Spanish travel group Grupo Marsans; and 20 A320s from Blue Wings. (Bloomberg, Airbus.com)