Max Kingsley-Jones/TOULOUSE
Airbus Industrie has landed one of the biggest deals in its history with British Airways' decision to place an order for up to 188 A320 family aircraft - the first time it has placed an order with the European consortium. The deal was only done after BA dropped plans to acquire its new fleet using innovative financing methods as the manufacturers were unable to offer competitive financing packages. The airline has also placed an order with Boeing for more 777s.
The Airbus order, worth some $9 billion at list prices, was secured after a bitter battle as Boeing, with its Next Generation 737 family, sought to stave off Airbus' latest bid to prise away one of its US rivals most feted and loyal customers.
International Aero Engines was selected over CFM International to supply its V2500-A5 to power the aircraft. Its component of the deal is worth some $2.5 billion.
The Airbus/IAE consortium was victorious, say BA's chief executive Bob Ayling, because its package "-provided the right aircraft at the right price." Although Airbus says it will not make a loss on the deal, industry observers believe the airline was able to secure a $1.6 billion discount. "I'd be quite surprised if any other airline can get a better deal," says Ayling.
BA's firm order for 59 aircraft includes 39 A319s and 20 A320s, while the 59 options and 70 provisional options can be exercised as any model in the A320 family. Deliveries of the firmly ordered aircraft start in September 1999 and run through to 2004, with options extending to 2006.
The first 21 aircraft will be delivered to the BA Regional division based at Manchester and Birmingham to replace Chapter 2 Boeing 737-200s. Later aircraft will replace 737s operated by BA's European Operations at Gatwick division, while the options will enable the fleets of BA's French and German airlines Air Liberté and Deutsche BA to be replenished. Deliveries to off-shore divisions are not expected to begin until 2003/4.
The financing proposals from the manufacturers were "-very disappointing-nothing like we'd hoped for," says Ayling. "We realised we could do it more cheaply on our own". BA will fund the order itself on the commercial market. Ayling says the airline was able to secure from Airbus and IAE some good airframe maintenance cost guarantees "-which enable us to tie down our engineering costs over the long term".
The airline has also opted for IAE's "fleet hour agreement support deal", which provides a guaranteed $ per engine hour cost for off-wing maintenance. Unusually, the engine support covers leased spare engines.
Ayling says that training arrangements for the new fleet are still being looked at. BA uses the Raytheon Systems simulator near London Gatwick for its small fleet of A320s inherited with its take-over of British Caledonian.
Meanwhile, BA has finalised a $5 billion deal for up to 32 more Boeing 777-200s, including 16 firm orders and 16 options, but has not yet selected the engine supplier. At the same time, the airline has cancelled a further order for five Boeing 747-400s, which combined with the deletion of four 747 orders earlier this year, means that BA now has just 10 Rolls-Royce RB211 powered 747-400s on order.
BA says the decision to take more 777s in place of 747s is part of a strategy to cut capital investment and boost frequency and unit yields. It adds that it will only order 777s "or equivalents" for its long- haul operations until a new 650-seater is available on a cost-effective basis.
BA operates 18 General Electric GE90-powered 777-200s and has five further GE-powered examples on order. Deliveries of new 777s will begin in January 2000 and continue until 2002. The majority of the new orders are for a new longer range version of the -200ER (extended range), with a maximum take-off weight of 297,800kg, and will be operated to "hot-and-high" airports in South Africa, Asia and South America.
An engine of over 92,000lb thrust (410kN) is required, with R-R favourite to beat GE and Pratt & Whitney in the bidding. Six of the 16 firmly ordered aircraft are options that are being exercised, and are committed to be taken with the GE90.
Source: Flight International
