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Boeing scores major coup at air show

Boeing Co. scored a major coup Tuesday, announcing that the original launch customer for its rival Airbus’ planned A350 had signed up for another 50 of its own flagship 787 Dreamliners.
/ Source: The Associated Press

Boeing Co. scored a major coup Tuesday, announcing that the original launch customer for its rival Airbus’ planned A350 had signed up for another 50 of its own flagship 787 Dreamliners.

Airbus has been fighting to win back support for its entry in the lucrative market for medium-sized long-range jets where it is up against the Dreamliner since it was forced into a redesign of the A350 by unhappy customers.

The most vocal of those was Stephen Udvar-Hazy, chief executive of Los Angeles-based International Lease Finance Corp., the world’s largest airline leasing company. IFLC’s deal with Boeing, announced at the Paris Air Show in Le Bourget, north of the French capital, makes the company the biggest customer for the 787 with 74 firm orders.

Udvar-Hazy hinted there would be more.

“The momentum is strong — you’ll be hearing more announcements in the months to come,” he told reporters after signing the deal with Boeing officials.

Udvar-Hazy added that he would meet with Airbus co-Chief Executive Louis Gallois to discuss progress on the A350 on Wednesday, but declined to elaborate. ILFC originally ordered 16 A350s, but those are on hold following the redesign.

The Dreamliner — the first commercial jet made of light, sturdy, carbon-fiber composites instead of aluminum — has more than 600 firm orders so far, easily outstripping those for the A350 at just over 100, and the aircraft is now sold out until 2013.

Mike Bair, who heads the 787 program for Chicago-based Boeing, said Tuesday that the plane remains on track for delivery to its first customer in May 2008. In contrast, the A350 will not be ready for its first delivery until 2013.

“We are where we need to be,” Bair told reporters. “We have pockets that are behind,” but the overall schedule for production remains steady, he said.

The ILFC orders announced Tuesday will begin delivery in 2013, carrying through until 2017. The earlier orders made by ILFC will start delivery in 2010.

The tussle between Airbus and Boeing for customers for the A350 and the 787 is at the heart of long-running rivalry between the pair.

Airbus sales chief John Leahy on Tuesday dismissed suggestions that Airbus had been forced to heavily discount its prices for the A350 to lure back customers after the problems with the jet.

Leahy said that the prices being achieved were comparable with those of the Dreamliner, adding that he had seen 787 pricing below the A350 price during negotiations with customers.

Bair was dismissive of that suggestion, pointing out that Airbus had not attempted to buy a Dreamliner and that airlines were keen to get the best price.

Planemakers often reserve big announcements for the air shows held on alternate years in Le Bourget and Farnborough, on the outskirts of London, to ensure maximum impact. The announcements usually include a mix of firm orders, which mean a deposit has been made and binding contracts signed, and memorandums of understandings for future orders.

Airbus continues to hold a strong lead in the overall tally at Le Bourget so far after announcing a raft of orders on Monday and two more on Tuesday for a total of nearly $50 billion at list prices. Boeing has booked orders worth around $13.2 billion.

Airbus also used the air show as a platform Tuesday to reassure investors and customers that it is back on track after the A350 difficulties and problems with its flagship double-decker A380.

The company’s decision to focus on the 525-seat A380 is the reason its position as the world’s dominant planemaker has slipped. Wiring and other technical problems have led to a two-year delay in delivery of the plane, which is expected to cut profits by 4.8 billion euros ($6.2 billion) for Airbus parent European Aeronautic Defense & Space Co. NV over the next four years.

The company overhauled top executives and set in place a restructuring plan that includes cutting 10,000 jobs over four years.

Flanked by the new management team at Tuesday’s news conference, Gallois was upbeat.

“We are in a process of turning the company around and this new management structure is, for you, the first tangible evidence that we are progressing,” he said.

Airbus also predicted that it will win at least 600 firm orders for its aircraft this year, including more than 20 for the double-decker A380 and 200 for the A350.

“I can tell you with full confidence that Airbus is back,” Gallois said.

Prior to the announcement of Tuesday’s deals, Leahy said that Airbus’ total firm order book for this year stands at 219, worth around $30 billion. The planemaker also has preliminary commitments for a further 120 planes, worth around $15 billion, he said.

The Airbus tally at Le Bourget includes a firm deal from to supply Qatar Airlines with 80 A350s and a preliminary deal with US Airways for another 22 A350s.

Orders on Tuesday included one from Memphis-based leasing company Intrepid Aviation Group for 20 cargo versions of its A330-200 wide-bodied aircraft, worth $3.5 billion at list prices.

In another deal, Malaysian airline AirAsiaX, a long-haul, low-cost startup, placed a firm order with Airbus for 15 medium-sized wide-bodied A330-300 jets worth $2.8 billion at catalog prices.

Boeing’s only order announced Tuesday was the one from ILFC, which included 10 next-generation 737s. The total order from ILFC was worth $8.8 billion.