BA places $8.2bn order with Airbus and Boeing
By Kevin Done, Aerospace Correspondent
Published: September 27 2007 02:18 | Last updated: September 27 2007 08:34
British Airways on Thursday placed its biggest order for aircraft since 1998 with a landmark move to buy both the Airbus A380 superjumbo and the Boeing 787 Dreamliner, the two most modern big jets on the market.
BA said the order was valued at $8.2bn at list prices before heavy discounts. The aircraft will be delivered between 2010 and 2014.
It has arranged $1.5bn of debt financing from a group of banks to cover all of the airline’s firm orders to the end of 2011.
The orders signal the beginning of BA’s campaign both to renew and to expand its existing fleet of 114 long-haul aircraft, with orders for jets worth tens of billions of dollars expected during the coming decade.
BA said that it had ordered 12 Airbus A380s with options for a further seven and 24 Boeing 787s with options for a further 18.
Both aircraft types will be powered by Rolls-Royce engines, with the UK group defeating rival offers from the Engine Alliance, a joint venture between General Electric and Pratt and Whitney, for the A380 power units and from GE for the 787. Shares in Rolls-Royce climbed 2.5 per cent to 532½p on the news.
The orders from BA, one of the most influential buyers of new aircraft, represent a big vote of confidence in the A380, where Airbus is seeking to recover from big problems in bringing the aircraft into series production with delays of up to two years in the early deliveries.
The first A380 is due to be delivered for commercial service in less than three weeks to Singapore Airlines.
While several of the early buyers of the A380 – including Singapore Airlines, Emirates and Qantas – have subsequently increased their orders, the BA purchase marks the first of what Airbus will hope is a second wave of new orders from leading carriers that have not previously backed the world’s biggest commercial jet.
For Boeing, the order provides further support for the 787 Dreamliner, already the most successful new aircraft ever launched, which is due to enter commercial service for the first time with Japan’s All Nippon Airways in May next year.
The US aircraft maker is also facing a struggle to bring the 787 into series production without delays, however, and has a delay of three to four months in making the maiden flight, which is currently due to take place by mid-December.
BA said the orders would give it the ability to increase its capacity by around 4 per cent a year, in line with the growth of the market.
Both the A380 and the 787 will greatly improve BA’s environmental performance to help meet its target of improving fuel efficiency by 25 per cent between 2005 and 2025.
The A380 and 787 both produce a quarter of the noise of the existing Boeing 747-400. In terms of carbon dioxide emissions per seat, the A380 will be 17 per cent cleaner than the Boeing 747-400 it will replace, while the 787 will be 30 per cent cleaner than the existing 767.
BA said the A380 would be used to provide more capacity for the airline’s key high-density markets and to maximise use of scarce landing and take-off slots at London’s Heathrow airport. The 787 would be used to start new routes and to increase frequencies in existing markets.
The airline is continuing to negotiate with Boeing and Airbus on its next round of orders to replace its remaining 747-400s. It is examining the 787-10 and the 777-300 ER from Boeing and the Airbus A350.
Copyright The Financial Times Limited 2007
