Qatar Airways in $15bn aircraft deal

Qatar Airways has given a big boost to European planemaker Airbus, choosing its future mid-sized jet over a more established rival from Boeing as part of a mammoth $15 billion order plan.

CEO Akbar al-Baker says Qatar Airways plans to expand rapidly
CEO Akbar al-Baker says Qatar Airways plans to expand rapidly

Doha-based Qatar Airways said on Monday it was close to signing a deal to buy up to 60 of Airbus’s new A350 jets worth $10.6 billion, and would also buy at least 20 of Boeing Co’s larger 777 planes for around $4.6 billion.

The massive order revived what was threatening to be a lacklustre Paris Air Show which has been dominated by a trade spat over planemaker subsidies rather than big deals.

Airbus chief Noel Forgeard said the planemaker now had enough orders to proceed with building the A350, Airbus’s answer to Boeing’s 787 model which has already racked up more than 250 potential orders.

The final decision rests with Airbus parent company EADS, which has delayed a go-ahead until September.

In a further boost, Airbus said it planned to announce another order for its 555-seat A380 aircraft.

The world’s biggest jetliner was the star attraction when it took to the skies above the Paris Air Show which was opened by French President Jacques Chirac, but Airbus has come under fire from customers in recent weeks by announcing a delay to deliveries.

Jet battle

Boeing hit back, saying it was looking to raise production of the 787 in 2008-09 to meet strong demand.

“The marketplace could eat up as many as we could produce,” Boeing’s 787 programme head Mike Bair told a news conference.

“The marketplace
could eat up as many [Boeing 787s] as we could produce”

Mike Bair, 
Boeing’s 787 programme head

The battle between Airbus and Boeing over mid-sized jets is becoming increasingly critical to both companies, as the aerospace industry recovers from an economic downturn that was exacerbated by the September 2001 attacks on the United States.

Randy Baseler, vice-president of marketing at Boeing Commercial Aircraft, said that plane output from Boeing and Airbus was likely to fall around 400 short of demand over the next two years.

As a sign of what is at stake, Boeing and EADS have made tit-for-tat complaints to the World Trade Organisation, accusing one another of taking unfair government subsidies in what could blow up into the biggest trade dispute in the WTO’s history.

The European Union and US delayed the immediate launch of WTO probes into the counter-claims, officials in Geneva said on Monday.

Standard practice

Blocking the creation of panels at the first request is standard practice in WTO disputes and the move had been widely predicted.

Airbus’s Forgeard, who is also co-chief executive designate for EADS, said government loans were not critical to the 4.35 billion-euro cost of building the A350, but that EADS was not prepared to “spit on” legitimate sources of money.

The Airbus A380 is the world’sbiggest airliner

The Airbus A380 is the world’s
biggest airliner

With its new aircraft, Qatar said it planned to triple in size over five years as it looked to capitalise on a boom in development and tourism in the oil-rich Middle East.

“Our passenger target by 2015 will be around 15 million and we should be having somewhere in the region of 90 to 105 aeroplanes,” Qatar Chief Executive Akbar al-Baker said.

“The Airbus A350 will be the ultimate choice for the future of the airline.”

The order puts Airbus closer to achieving its target of 100 orders for the A350 by the end of this week’s air show, the world’s biggest.

“I always stand by what I say – 100,” Airbus’s chief salesman John Leahy said, asked whether he stood by his recent forecast.

Rapid development

Airbus has already sold 10 of the planned A350 aircraft, due to start deliveries in 2010, to Air Europa and another 20 to US Airways in return for a $250 million financing loan. US Airways is due to be taken over by America West.

Middle Eastern airlines have dominated orders at recent international air shows as rapid development, including a new airport for the tiny Gulf Arab state of Qatar, and growing tourist numbers drive passenger demand.

The tiny state of Qatar sits atophuge gas and oil reserves

The tiny state of Qatar sits atop
huge gas and oil reserves

Dubai-based rival Emirates disappointed aircraft builders last week by saying it did not plan to make a major order announcement at the show.

The mix of Airbus A350-800 and A350-900 planes would be delivered as part of a fleet upgrade programme between 2010 and 2015, Qatar said.

The Boeing 777-300ER model was likely to account for around half of the order with the US aerospace group with delivery scheduled between 2007 and 2010.

Al-Baker said he expected the orders to be signed within “days” or “weeks”. None of the new orders would replace existing aircraft orders, he said.

General Electric Co will supply engines for all the planes.

Source : Reuters

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