Airbus Widebody Order

Guess someone’s happy at Airbus:

http://www.guardian.co.uk/business/story/0,3604,978854,00.html

Airbus and Emirates sign $12bn deal

Blow for Boeing | Boost for Rolls-Royce

Terry Macalister in London and Mark Milner in Paris
Tuesday June 17, 2003
The Guardian

Growing hopes of a bounceback in the aviation industry were given a boost yesterday when Dubai-based airline Emirates announced a record $12.5bn (£8.3bn)

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order for 41 wide-bodied jets.
The deal with European plane maker Airbus is a blow for American rival Boeing. But it will also send a frisson of fear around the ranks of airlines with less modern aircraft such as BA.

The biggest ever contract for jumbo jets comes as the industry is still struggling from the aftermath of September 11 and, more recently, the Sars outbreak. In the past two years airlines have lost an estimated $30bn.

Yesterday’s deal also represents a fillip for UK aero engine maker Rolls-Royce, which will supply nearly $1bn worth of propulsion systems.

The firm has been awarded a 15-year supply and service agreement for its Derby-made Trent 500 engines which will power 20 Airbus A340 aircraft ordered by Emirates.

As well as the A340s the ambitious government-owned airline has also ordered a further 21 A380 aircraft – the new 600-seat-plus double decker super jumbo, making it the biggest single customer for the aircraft.

The $12.5bn price tag is based on a future value catalogue price. However, many analysts believe that Airbus offered big discounts to wrest the contract away from Boeing.

Airbus, 20%-owned by BAE Systems, and with two manufacturing plants in Britain -said it was on target to deliver 300 jets this year, far above its previous forecast of 175. It is set to overtake Boeing for the first time in 25 years.

“The market is better than we expected, and our market share has increased much more than we anticipated,” said Airbus chief executive Noel Forgeard.

The Emirates order was announced at the Paris airshow yesterday alongside news that Eads, which owns 80% of Airbus, has reached a deal with the Ministry of Defence on a £2bn deal to provide global military satellite communications for the British armed forces.

In addition to the Airbus order, Emirates is acquiring 26 Boeing aircraft, though 24 are being acquired through leasing companies, which means it will only increase the US company’s order book by four.

Its orders come at a crucial juncture for the airline manufacturers which are struggling to maintain production schedules as airlines seek to scale back orders or delay deliveries.

Sandy Morris, aerospace analyst with ABN Amro in London, believes the Emirates contract is of huge significance and demonstrates that confidence is seeping back into the industry.

“This shows that Emirates believes that traffic growth will return to the traditional 4-5% per annum growth rate seen before the industry’s troubles began,” he said.

“It shows that Boeing made a terrible mistake giving Airbus a free ride with its A380 and will worry those airlines such as BA which have not invested in this kind of aircraft.”

The A380 jet is 15% cheaper per seat mile than its Boeing 747-400 equivalent but Emirates will have to fill its Airbus aircraft, which can carry 500-550 passengers.

Emirates has none of the historical legacies carried by more established European airlines which are struggling against a high cost base and older aircraft.

At the weekend, Boeing’s chief executive Alan Mulally delivered a cautiously optimistic view of the market. “Our best assessment is that traffic comes back in 2003, the airlines repair their balance sheets and keep working at productivity and get back on track in 2004.”

Yesterday’s order from Emirates takes the Airbus order total for the current year to 197, while it now has orders for 116 A380