CHICAGO/SEATTLE (Reuters) – Boeing Co. (NYSE:BA – News)landed a big win over rival jet maker Airbus on Tuesday, as thriving low-fare carrier AirTran Airways ordered up to 110 narrow-body planes.
The big order, which had been in the works for months, gives Boeing some relief from a persistent sales slump. The world’s largest commercial aircraft builder, headquartered in Chicago, has fired about 35,000 workers in its Seattle-based commercial jet unit since the Sept. 11, 2001, attacks.
AirTran, with a hub in Atlanta, said it would lease or buy 50 737-700 airliners and take options on 50 more. Each plane seats 135 to 140 passengers. The unit of Orlando, Florida-based AirTran Holdings Inc.(NYSE:AAI – News) can also upgrade to the 737-800, which seats up to 189 passengers.
The order would be valued at about $6 billion based on list prices, but manufacturers typically offer steep discounts, particularly for large orders. It will allow AirTran to more than double the number of passengers it carries.
“Obviously we can’t talk about the details of the deal, which are confidential … I would just say it is a great time to buy airplanes,” AirTran Chief Executive Joe Leonard told Reuters by telephone.
An additional order for up to 10 117-seat Boeing 717 jets helps stabilize a production line Boeing had considered closing down for lack of sales.
Shares of AirTran surged nearly 7 percent on Tuesday, while Boeing shares rose nearly 1 percent.
Boeing, which has close ties to AirTran and has even made capital investments in the carrier, was still wary of the bid from Airbus. The European jet maker has steadily gained market share and is projected to deliver more jetliners than Boeing in 2003 for the first time ever.
“That threat is always serious,” said Randy Baseler, Boeing vice president of commercial jet marketing. “Airbus is a very aggressive competitor,” Baseler told Reuters by telephone.
Deliveries will begin in June 2004 and proceed at about one airplane per month, AirTran said. The initial batch will come on leases from General Electric Co.’s (NYSE:GE – News) financing unit, GE Capital Aviation Services, which will provide 22 of the 737s.
Most of those jets have already been ordered by GECAS, but AirTran officials said the lessor will also exercise some options, padding Boeing’s order book.
GE and France’s state-owned Snecma Moteurs, through a joint company called CFM International, have an exclusive contract with Boeing to provide engines on all new twin-jet 737s.
The 28 other 737s will come via a mix of sales and leases, and the 717s will be financed by Boeing Capital Corp., which owns the airline’s current fleet of 717s, slated to grow to 73 aircraft by October.
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The waiting and debating is over then. Congradulations Boeing on a new order. Hopefully some new destinations with this fleet expansion.
By: US Agent - 7th July 2003 at 22:49
AirTran Airways Places $300M CFM56 Order
(Source: CFM International; issued July 1, 2003)
EVENDALE, OHIO — AirTran Airways today announced an order for CFM56-7B engines to power up to 100 Boeing 737-700/-800 aircraft scheduled to begin delivery in June 2004. The 100 aircraft includes a combination of 50 purchased and leased aircraft, along with options for 50 additional 737s. The value of the firm engine order to CFM International is more than $300 million.
The CFM56-7B engine is produced by CFM International (CFM), a 50/50 joint company between Snecma Moteurs of France and General Electric Company. CFM is the world’s leading supplier of commercial aircraft engines with more than 13,500 in commercial and military service worldwide.
AirTran Airways, a subsidiary of AirTran Holdings, Inc. is based in Orlando, Florida, and operates nearly 500 flights daily to 43 destinations across the country, including nearly 200 daily flights from its hub at Hartsfield Atlanta International Airport. The airline began flying in 1993 and has grown into one of the largest low-fare carriers in the United States. The new 737s, which provide greater range and seating capacity than its current fleet, are part of an expansion and renewal plan.
The first CFM56-7-powered 737-700 was delivered in December 1997. In just over five years of service, the fleet has accumulated 20 million flight hours and 10 million flight cycles, representing the fastest accumulation of hours and cycles in commercial aviation history. The fleet has also maintained exceptional reliability. There are currently more than 1,200 CFM56-7-powered Boeing 737-600/-700/-800/-900 aircraft in service worldwide.
By: steve rowell - 5th July 2003 at 05:19
The boys at Renton will be happy
By: pierrepjc - 4th July 2003 at 22:03
Yes very interesting, — take a look at The Seattle Times website, story in question is in regard to the shares Boeing have taken opitions on. Very good bit of dealing and so well timed
seattletimes.nwsource.com/html/boeingaerospace/135155849_airtran03.html
Paul
By: Hand87_5 - 4th July 2003 at 18:13
I guess those guys were pretty clever;
As far as I remember AirTran was ValueJet before and they experienced this terrible crash in the Everglades, when a DC9 disapeared.
It was smart to change the name of the company.
Good news for Boeing anyway , they need it nowadays.
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July 4, 2003 at 5:27 pm