Max Kingsley Jones/LONDON

British Airways is entering final negotiations with Airbus and Boeing to acquire its new short haul fleet, but the two manufacturers are having to discuss deals with leasing companies to help them meet the airline's requirements for early delivery slots.

The UK carrier is aiming to finalise a deal within the next couple of months for at least 100 120-160 seaters to replace its fleet of Boeing 737-200s operated by the BA Regional and EuroGatwick divisions. The deal will include an initial batch of around 30 firm orders, for delivery from the second half of 1999, which is proving a headache for the manufacturers as they struggle to find free slots next year. As a result, the early deliveries may have to be filled by aircraft that are already allocated to leasing companies, with the manufacturers acting as intermediaries.

BA is pushing the two rivals hard to come up with ground-breaking "power by the hour" lease deals for the new aircraft, combining competitive pricing with purchase options and all maintenance requirements thrown in. The two manufacturers have asked several maintenance companies to put in proposals as part of their wider bids. The possible need to include aircraft on relatively expensive operating leases from third parties is complicating matters for the two manufacturers as they each try to submit competitively priced bids.

BA has been aiming to put the offers to its board for final selection during the monthly meeting in mid-July, but looks likely to slip to August as there are still outstanding issues. Meanwhile, senior BA board members are expected to be given demonstrations of the competing types - the Airbus A319/ A320 and Boeing Next Generation 737 - in mid June.

British Airways has signed a deal with Atlas Air for the long term wet-lease of a Boeing 747-400 freighter, which will be delivered in early August. The aircraft will be used on the airline's three weekly flights from Stansted to Hong Kong, replacing a 747-200 leased from Atlas.

Source: Flight International