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Business

R
Reuters
November 16, 2017

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US investor nears record 400-jet Airbus order

US investor nears record 400-jet Airbus order

DUBAI: Airline pioneer Bill Franke looked set to place a historic $40 billion order for around 400 Airbus A320 jets, shaking up the low-cost industry and turning the annual race between Airbus and Boeing for plane orders on its head.

Franke, 80, flew to the United Arab Emirates on Wednesday and was due to sign at the Dubai Airshow, marking one of the industry´s biggest deals by volume and the most planes sold by Airbus in one batch, two people familiar with the matter said.

Franke´s Indigo Partners, which controls Denver-based Frontier Airlines and owns part of Mexicoâ             s Volaris, is known for unbundled or a la carte fares in so-called ultra-low-cost airlines, where passengers are offered cheap base prices with the option of paying more for extras.  Airbus and Indigo Partners declined to comment on the deal, which Bloomberg News said could involve 430 jetliners.

The deal marks a dramatic turnaround for Airbus, which had been lagging behind Boeing in the contest for orders so far this year and had started the Nov 12-16 air show on a backfoot.

With Boeing so far dominating the headlines, delegates said all eyes were on Airbus where sales chief John Leahy, a veteran of last-minute air show surprises, was plotting a blockbuster climax to a more-than-20-year stint as marketing boss.

Even so, competition at the show remained intense.

Reuters reported on Sunday that budget carrier flydubai was talking to Airbus and Boeing about a potential new order for up to 175 passenger jets and talks had accelerated.

Such a large order could be split between the makers, but Boeing has the advantage as flydubai´s current supplier, industry sources said. Boeing and flydubai declined to comment.

Separately, Egyptair, which placed an initial order for 12 Bombardier CSeries on Tuesday, could return for more airplanes from the larger planemakers, industry sources said.

The focus was however on two industry titans of the $100 billion a year airplane business: the investor Franke and the salesman Leahy.

Leahy, 67, is due to retire in coming months after serving as sales chief for the European planemaker since 1994.Since then, he has overseen the sale of jets worth $1.7 trillion at list prices and Airbus´s market share has risen from 18 percent to be roughly evenly split with arch-rival Boeing.

This year, however, Airbus´s share of the two giants´ combined order tally has dropped to 35 percent as a rejuvenated Boeing management made advances in Singapore and elsewhere and Airbus´s morale was hampered by compliance investigations.  That has triggered industry talk of a swan-song order worth tens of billions of dollars to be negotiated by Leahy before end-year.

Separately, the immediate prospect of a much-discussed deal to keep the A380 in production beyond the end of the decade remained in suspense with Emirates seeking guarantees over the longevity of the programme, plagued by slow orders from other carriers.

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