Airbus $50bn jet deal takes sting out Boeing mega wins

Airbus announced the biggest commercial-plane transaction in its history, securing an order for single-aisle aircraft valued at nearly $50bn (€42.6bn) at the Dubai Air Show, outdoing Boeing’s own $20bn mega-deal.

The deal for 430 A320neo planes with US investor Indigo Partners marked a turnaround for Airbus at the expo, where it had been trailing its rival. It’s also a crowning achievement for sales chief John Leahy, who is set to retire after a career in which he has struck deals for more than 16,000 jets and lifted the European aircraft maker into a duopoly position with Boeing.

For Indigo Partners, led by Bill Franke, the Airbus accord provides upgraded narrow-body aircraft to boost the fleets of low-cost carriers from Denver to Budapest. The planes will go to four companies in Indigo’s investment portfolio: Hungary’s Wizz Air, Frontier Airlines, Mexico’s Volaris, and Chile’s JetSmart, which began operating this year.

The deal features 273 A320neo jets together with 157 of the larger A321neo variant and is worth $49.5bn before customary discounts, Airbus said.

Mr Leahy, 67, called the transaction “remarkable,” while Mr Franke, 80, who co-founded Indigo in 2002, said it underscores his confidence in the A320 and the bargain fares, no-frills travel model he helped develop.

Boeing recovered some ground with the sale of 175 737 Max planes, the A320’s main competitor, to FlyDubai, a deal big enough to have dominated most air shows.

While that order will come as an irritation for Airbus, with the airline having been expected to split it between the two manufacturers, the Toulouse-based company wasn’t done at the Dubai event. It went on to announce EgyptAir as the operator of 15 A320neos previously ordered by leasing firm AerCap.

The Indigo deal more than doubles Airbus’s previous order book for the year, which stood at about 290 aircraft, pushes the planemaker’s backlog above 7,000 jets and reverses expectations that orders will trail deliveries in 2017.

The haul will also help Airbus catch up to Boeing in the order tally this year, with the European planemaker having chalked up 343 contracts at the end of last month, compared with 690 for its Chicago-based rival. The order also trumps a 2015 $27bn deal for 250 single-aisle jets by Indian budget carrier IndiGo. The two companies aren’t related.

The massive A320 win takes the sting out of a possible defeat on the A380 superjumbo, which has so far failed to clinch a follow-up deal with local carrier Emirates at the Dubai show.

The companies have been in talks on a deal for about 36 additional double-deckers valued at $15.7bn, sources said.

The A380 has become all but a fringe product for Airbus, with a total order book of 317 — more than 100 short of the A320s that Indigo plans to buy. Emirates itself snubbed Airbus on the first day of the show with a surprise $15bn order for Boeing 787 wide-body jets, after also looking at the European company’s A350.

The Indigo purchase provides a boost to Airbus chief executive officer Tom Enders, who has found himself on the defensive amid an investigation into bribery allegations at the company.

Mr Enders has warned employees that the probe is likely to be a drawn-out process that could result in “serious consequences” and “significant penalties”.

A German who has run Airbus for five years, Mr Enders orchestrated another coup last month when he struck a deal with Bombardier to take a majority stake in the Canadian company’s C Series jet programme.

That helped throw Bombardier a lifeline for its slow-selling aircraft, helping to save thousands of jobs at plants in Belfast.

Airbus makes the A320 family at different sites around the world, including its main factory in Toulouse as well as in Hamburg.

Bloomberg


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