Tuesday 17 September 2019

Airbus wants chance to scupper Boeing's $24bn deal with IAG

IAG CEO Willie Walsh Photo: Bloomberg
IAG CEO Willie Walsh Photo: Bloomberg
John Mulligan

John Mulligan

AIRBUS wants a shot at pitching Aer Lingus owner IAG for a mammoth order of 200 jets that the airline group has pledged to buy from Boeing.

IAG, whose chief executive is Willie Walsh, gave embattled Boeing a major lift this week at the Paris Air Show after it signed a letter of intent to buy 200 of the aircraft maker's beleaguered 737 Max jets.

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The planned order is hugely significant for Boeing, at a time when 737 Max jets around the world remain grounded following two deadly crashes.

The narrowbody Max jets that IAG intends to buy will be used by its Level and Vueling carriers, as well as by British Airways out of Gatwick.

That order, if formalised, would be worth $24bn (€21.5bn) at list prices. However, IAG would certainly have negotiated a deep discount on the aircraft order given the predicament that Boeing is in.

IAG also placed a more than $700m order at list price for six of the new Airbus A321XLR jets for Aer Lingus. The single-aisle aircraft could reach destinations such as Denver from Dublin. Those aircraft will be delivered from 2023.

Airbus confirmed yesterday at the Paris Air Show that it had not been given an opportunity to compete with Boeing for IAG's 200-jet order.

The manufacturer said that it nevertheless wanted a chance to bid for that business.

The company's sales chief, Christian Scherer, made the comment after announcing a total of 363 orders and commitments so far at the Paris Air Show, including 226 for the A321XLR.

Speaking yesterday at IAG's annual general meeting in Madrid, Willie Walsh again praised the 737 Max aircraft.

"We believe these aircraft will make a successful return to service in the coming months, having received approval from the regulators, and will be a great addition to our fleet," he said.

He told shareholders that Aer Lingus had made a record profit last year. The airline, acquired by IAG in 2015 for €1.36bn, paid a €200m dividend in 2017 to its immediate UK parent.

"North Atlantic expansion continued, backed by profitable short-haul flying," said Mr Walsh yesterday.

"This provides the opportunity to further develop Dublin as a hub connecting Europe and North America and we welcome cost-effective expansion at the airport," he said.

He pointed out that Aer Lingus will become the first airline in the IAG group to operate the longer-range A321LR aircraft, when it begins flights between Dublin and Hartford, Connecticut.

Aer Lingus has 14 of the A321LR jets on order, with four to be delivered this year.

In March, the airline said that delivery delays with the A321LR jets forced it to make changes to its transatlantic schedules this year. That included the deployment of one of the jets on the Hartford route. An A321LR had been expected on it in July, but won't join until August.

Aer Lingus also reduced frequencies for July on routes from Dublin to Philadelphia, Minneapolis-St Paul, Hartford and its Shannon-JFK service. Its Dublin-Montreal service was due to begin in August, but was pushed back to summer next year.

Yesterday, Mr Walsh thanked former Aer Lingus chief executive Stephen Kavanagh, who stepped down in January, and welcomed his successor, Sean Doyle, to the role.

Additional reporting: Reuters

Irish Independent

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