Lufthansa orders 20 more 747s from Boeing

/ Source: The Associated Press

In a blow to Airbus SAS, German airline Lufthansa AG said Wednesday it would order 20 Boeing 747-8 planes, with an option for 20 more, becoming the first passenger airline to order the new long-haul jet.

The Cologne-based airline said it would start taking delivery of the wide body planes, the longest in the world, in 2010 as it expands into North America and Asia. The airline also approved an order for seven Airbus A340-600 long-haul jets, due for delivery by 2008. The airline already operates 13 of those planes.

Lufthansa said the order for all the planes had a list value of $6.9 billion; Boeing place a $5.5 billion value on its portion of the deal.

The move was even more striking considering that the parent company of Airbus, EADS, is a joint Franco-German operation.

“Lufthansa is noted for its careful aircraft selection. It must have been somewhat difficult to have made the decision that they did, given Germany’s interest in Airbus,” said Paul Nisbet, an analyst for Rhode Island-based JSA Research. “But they did it and I think all the major airlines will take notice. And all those that have 747 fleets will take a second look at this.”

Lufthansa Chief Executive Wolfgang Mayrhuber said the new order would help it take some older aircraft out of service, making its fleet more efficient by reducing fuel and operating costs. It said they would also produce less emissions.

“Both aircraft types are sustainable investments in ecological efficiency,” he said.

However, he also singled out the Boeing model for extra praise.

“With the orders for the highly modern B747-8, Lufthansa is setting standards. The Boeing B747-8 is more than just a derivative of the successful Boeing B747 series,” Mayrhuber said.

The announcement was made after the close of the Frankfurt stock exchange. Lufthansa shares earlier closed 1 percent lower at 19.97 euros ($26.51). On the New York Stock Exchange, Boeing shares rose 60 cents, or 1 percent, to $91.33.

For Airbus, the order was the latest in a series of mishaps and strategic missteps.

After concentrating massive resources on its flagship A380 superjumbo, Toulouse-based Airbus has been outmaneuvered by Boeing’s two-engine 787, which delivers better fuel economy than older four-engine Airbus jets in the same size category. Higher fuel prices have made the fuel-efficiency argument more persuasive.

The superjumbo’s overall two-year delay wiped about $6.39 billion from profit forecasts over four years and has forced Airbus to consider basing assembly work on new models at a single site, rather than splitting it among several countries.

For Boeing, the order represents a vote of confidence and could cause other major European flag carriers, such as British Airways and Scandinavian Airline System to consider the new 747-8.

“I’d call it extremely significant. This is the first indication that there could be a good market for this 747-8, and as such it’s very likely to be taking potential orders away from the A380. I can’t think of anything that Boeing would like more,” said Nisbet.

“By my count, Boeing now has 112 747s in backlog. That’s not too many less than what the A380 has. So it could very well be, if we get a follow-through by British Airways or Cathay Pacific or somebody, they could have a bigger backlog than the A380, which would be something that two years ago, if I’d have said the same thing, people would have said I’d lost my mind.