Airbus seals RM208.5b jet deal to outdo Boeing in Dubai

The deal features 273 A320neo jets together with 157 of the larger A321neo variant


CHICAGOAirbus SE announced the biggest commercial-plane transaction in its history, securing an order for single-aisle aircraft valued at nearly US$50 billion (RM208.5 billion) at the Dubai Air Show, outdoing Boeing Co’s own US$20 billion mega-deal.

Yesterday’s pact for 430 A320neo planes with US investor Indigo Partners LLC marked a turnaround for Airbus at the Gulf expo, where it had been trailing its rival. It’s also a crowning achievement for sales chief John Leahy, who is set to retire after a career in which he has struck deals for more than 16,000 jets and lifted the European planemaker into a duopoly position with Boeing.

For Indigo Partners, led by Bill Franke, the Airbus accord provides upgraded narrow-body aircraft to boost the fleets of low-cost carriers from Denver to Budapest. The planes will go to four companies in Indigo’s investment portfolio: Frontier Airlines, Mexico’s Volaris, East European operator Wizz Air Holdings plc and Chile’s JetSmart, which began operating this year.

The deal features 273 A320neo jets together with 157 of the larger A321neo variant and is worth US$49.5 billion before customary discounts, Airbus said. Leahy, 67, called the transaction “remarkable”, while Franke, 80, who co-founded Indigo in 2002, said it underscores his confidence in the A320 and the bargain fares, no-frills travel model he helped develop.

Airbus shares rose as much as 4% and were trading 2.9% higher at €85.93 (RM424.49) as of 11:13am in Paris yesterday, taking the gain this year to 37%.

Boeing recovered some ground with the sale of 175 737 Max planes, the A320’s main competitor, to FlyDubai, a deal big enough to have dominated most air shows.

While that order will come as an irritation for Airbus, with the airline having been expected to split it between the two manufacturers, the Toulouse, France-based company wasn’t done at the Dubai event. It went on to announce EgyptAir Airlines Co as the operator of 15 A320neos previously ordered by leasing firm AerCap Holdings NV.

The Indigo deal more than doubles Airbus’ previous orderbook for the year, which stood at about 290 aircraft as of Oct 31, pushes the planemaker’s backlog above 7,000 jets and reverses expectations that orders will trail deliveries in 2017.

The haul will also help Airbus catch-up to Boeing in the order tally this year, with the European planemaker having chalked up 343 contracts at the end of last month, compared to 690 for its Chicago-based rival as of Nov 7. The order also trumps a 2015 deal for 250 single-aisle jets worth US$27 billion by Indian budget carrier IndiGo. The two companies aren’t related.

The massive A320 win takes the sting out of a possible defeat on the A380 superjumbo, which has so far failed to clinch a follow-up deal with local carrier Emirates at the Dubai show. The companies have been in talks on a deal for about 36 additional double-deckers valued at US$15.7 billion, people familiar with the negotiations have said.

The A380 has become all but a fringe product for Airbus, with a total orderbook of 317 — more than 100 short of the A320s that Indigo plans to buy.

The breakdown of the Indigo order is as follows:

Wizz — 146 planes (72 A320neo, 74 A321neo); Frontier — 134 planes (100 A320neo, 34 A321neo); Volaris — 80 planes (46 A320neo, 34 A321neo); and JetSmart — 70 planes (56 A320neo, 14 A321neo)

Boeing’s 737 deal from FlyDubai includes more than 50 of the largest Max 10s, with the balance to be made up of Max 8s and 9s, according to a statement. The carrier, which is due to integrate more closely with Emirates over coming months, also has options on 50 more aircraft.

Emirates itself snubbed Airbus on the first day of the show with a surprise US$15 billion order for Boeing 787 wide-body jets, after also looking at the European company’s A350.

The Indigo purchase provides a boost to Airbus CEO Tom Enders, who has found himself on the defensive amid an investigation into bribery allegations at the company. Enders has warned employees that the probe is likely to be a drawn-out process that could result in “serious consequences” and “significant penalties”. — Bloomberg