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British Airways chooses Boeing planes for expansion

British Airways Plc, Europe's third-largest airline, placed an order worth as much as $1.6 billon for Boeing Co. planes over a rival model from Airbus SAS in the first stage of a plan to expand its fleet and replace older jets.

The airline chose four Boeing 777s over Airbus's A330s and took options on four additional jets, the company said today in a statement. The first 777-200 ERs will be delivered in 2009, with the options available in 2010 as the carrier expands its fleet. Boeing Co. and Airbus SAS will compete for a larger order of 34 replacement aircraft and an unspecified number of planes for expansion later this year, Robert Boyle, the airline's commercial director said on a conference call with journalists.
„The larger order is the key one,” said Chris Avery, an analyst with JP Morgan in London , who has a „neutral” rating on the stock. „Ultimately over 70 aircraft will have to be replaced over the next few years.” Shares of British Airways Plc fell as much as 3.75 pence, or 0.7%, to 569.5 pence, and were down 0.4% at 10:29 a.m. in London. Shares of Airbus parent European Aeronautic, Defence & Space Co. fell 11 cents, or 0.4%, to €25.84 in Paris.
EADS lost 19% over the last 12 months, while Boeing gained 25%. The selection of Boeing in the first step of the competition „in no way suggests the outcome of the second order,” Boyle said. „This was a close decision but what tipped the balance was that it was easy to fit these aircraft in with our existing fleet.”

The airline has 43 Boeing 777 aircraft in its fleet of which 27 have General Electric Co. engines and the remainder have Rolls-Royce Group Plc engines. Negotiations about which engines to use on the new planes continue, said the airline. It plans to use the new long-haul aircraft for operations out of its new home at Terminal 5 at London's Heathrow airport.
The second round of competition will pit Airbus A330, A350 and A380 planes against Boeing 777, 787 and 747-8 jets. The company plans to retire 20 older Boeing 747s and 14 Boeing 767s. British Airways today also exercised options for an additional four single-aisles Airbus A320s. (Bloomberg)