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Airbus wins coveted BA mini-jumbo order

An A380 aircraft is seen through a window with an Airbus logo during the EADS / Airbus 'New Year Press Conference' in Hamburg January 17, 20
An A380 aircraft is seen through a window with an Airbus logo during the EADS / Airbus 'New Year Press Conference' in Hamburg January 17, 20

By Brenda Goh and Tim Hepher

LONDON (Reuters) - International Airlines Group unveiled orders for 18 Airbus A350 long-haul jets for its British Airways arm and said it was in further talks with Airbus and Boeing to secure more planes for Spanish unit Iberia.

The closely fought $6 billion order for the largest version of Airbus' newest jet is likely to step up competition with Boeing over the lucrative "mini-jumbo" plane market, almost entirely dominated by the U.S. manufacturer's wide-bodied 777.

IAG said it had placed 18 firm orders for the A350-1000, worth $332 million each at list prices, along with 18 options.

Rolls Royce , whose Trent XWB engines will power BA's A350 fleet, said the order was worth $1.6 billion for the UK group.

Separately, French sources said more Airbus jet sales could feature in a visit to China by President Francois Hollande later this week. Top Airbus officials are in a business delegation expected to travel with Hollande on the April 25-26 trip.

Reuters reported on April 7 that BA was close to ordering around 20 of the 350-seat A350-1000s, deepening its presence at one of the U.S. company's most prominent big-jet customers.

BA is about to receive its first of 12 Airbus A380 superjumbos. But the A350 deal marks its first European purchase in a more valuable section of the market led by Boeing, involving twin-engined jets seating more than 300 people.

"This is a blow for Boeing," said Adam Pilarski, senior vice president at aviation consultants Avitas and former chief economist at Douglas Aircraft, which is now part of Boeing.

But he added that after a period of production upheaval in the aircraft industry, many airlines might prefer the relatively safer option of a widely expected upgrade of the existing 777.

Analysts say if Airbus' momentum continues following a period of mixed order success for the A350-1000, the BA sale could put pressure on its rival to speed up its revamp of the hugely successful, but older and heavier 777.

A senior Boeing executive, 787 Dreamliner program chief Larry Loftis, told European reporters on Monday a three-month grounding of the 787 over battery problems had not diverted attention from new projects such as the revamped "777X".

Airbus sales chief John Leahy, who has been pushing internally for extra capacity to free up more production slots for the largest A350 variant, said the A350-1000 was hampered only by limited supply.

JUMBO REPLACEMENT

"This is clearly a breakthrough with a large 777 operator and a large Boeing wide-body operator," Leahy said.

The first IAG aircraft will be delivered in 2018, he said, adding no decision had been taken on expanding the A350 assembly line in France. The first A350, the middle-sized of three variants under development, is scheduled to fly in the summer.

Boeing reiterated it was "aggressively" moving forward with its studies on updating the 777, its most profitable jetliner.

"While we haven't set a firm timeline or launched the program, we've consistently talked about a potential entry into service around the end of the decade," said spokeswoman Karen Crabtree.

IAG reaffirmed plans to convert 18 options for Boeing's 787 long-haul planes into firm orders.

Together with the newly ordered A350s, these aircraft will be used to replace 30 Boeing 747-400s between 2017 and 2023. BA is the largest operator of Boeing's legendary jumbo jet.

Boeing is in the process of restoring the high-tech Dreamliner to service after U.S. authorities approved a reinforced and redesigned battery on Friday.

For Spanish flag carrier Iberia, IAG said it had reached agreement with Airbus and Boeing to secure commercial terms and delivery slots that "could lead to firm orders for A350s and/or for Boeing 787s".

Firm orders will only be made when Iberia is in a position to grow profitably after restructuring, IAG said.

Airbus is the civil jet unit of European aerospace group EADS .

(Editing by James Regan and Leslie Gevirtz)

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