British Airways steals Airbus’ show of best-seller A320neo

Source:Reuters Published: 2019/6/20 17:53:40

Speculation rises as the biggest airlines in the world battle for supremacy

Airbus, reeling from the potential loss of a major customer for its best-selling A320neo, after British Airways owner IAG placed a lifeline order for Boeing's grounded 737 MAX, prepared to hit back on Wednesday with more orders for its new A321XLR.

The European plane maker has been negotiating with US investor Bill Franke whose Indigo Partners have been known to place orders for multiple airlines within its portfolio and could close a deal at the Paris Air +Show, industry sources said.

Airbus declined to comment.

After intense scrutiny over safety and its public image, Boeing won a vote of confidence on Tuesday as IAG signed a letter of intent to buy 200 of its 737 MAX jets that have been grounded since March after two deadly crashes.

The surprise order lifted the energy of a previously subdued air show, where the talk had been of the possible end of the aerospace giant, given the challenges at Boeing and Airbus  recently, as well as geopolitical and trade tensions around the world.

It was not immediately clear how many of the 200 aircraft will end  up constitution a firm order and how many will be options. Nor is it clear how this move will affect Airbus's presence at IAG, which placed an order for 14 of Airbus's A321XLR hours before the announcement.

"It's a great coup, but for now it's a communications coup as it's a letter of intent. We will see what kind of deal lies behind it," a European industry source said.

Even so, Boeing is expected to try and capitalize quickly on the move and seek further support for the embattled MAX as it offers airlines other big packages at attractive prices.

Australia's Qantas Airways said on Wednesday it would order 10 Airbus A321XLR jets and convert  a further 26  from existing orders already on the plane maker's books.

Airbus is also in talks with leasing company GECAS and has been trying to secure eye-catching orders for the A321XLR from JetBlue and American Airlines, though the world's largest carrier does not typically announce deals at air shows.

Airbus sales chief Christian Scherer said there was some softness in the market but did not see an increase in cancellations. He told investors he expected to win more orders for the smaller A220, formerly known as C-Series.

Both Airbus and Boeing are cushioned by thousands of orders for the single-aisle jets.

Boeing took advantage of a lull in firm plane orders to sign contracts worth more than $100 million for digital services for its newer, but fast-growing global unit , as the air show entered its third day on Wednesday.

Boeing Global Services' boss Stan Deal touted agreements from more than 10 global carriers ranging from flight crew planning for US carrier United Airlines, to an aircraft health monitoring deal with Slovak charter airline Go2Sky.

The deals reflect a two-year push by the world's largest plane maker into the higher-margin services business that includes aircraft parts and maintenance as well as analytics.  This deal is intended  to grow Boeing's revenue to $50 billion within the coming decade, as significant increase from its 2018 revenue of around $17 billion.

The deal follows Monday's surprise announcement that Boeing will manage and maintain a global exchange inventory of parts for Airbus' A320 and A320neo single-aisle aircraft for British Airways.  This is the first such agreement by the US plane maker, to support rival Airbus' aircrafts has been made.

British Airways also signed a deal for three landing gear exchanges for its Boeing 777 wide body fleet, while Boeing's subsidiary Jeppesen will provide United Airlines with analytics services to help the carrier optimize crew planning operations for its entire fleet.

Boeing has reorganized its sales operations as part of a push into services for civil and defense aircrafts designed to increase the number of deals and boost profits as it will make it easier for Boeing to sell high-margin services at the same time as it is selling planes.

Both Boeing and rival Airbus are muscling deeper into the higher-margin market for repairs, maintenance and analytics services in a push that has rattled the aerospace supply chain. The push comes as airlines try to keep a lid on costs by planning jet purchases and long-term operations together.

Airbus has set a goal of tripling services revenues from its commercial aircraft business to $10 billion within the next seven years and sharply reduce the number of times its jets are stranded on the ground for technical reasons.

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