From Expat-Village.com
Airbus Wins A350 Deals in Paris, Gets Halfway to Goal
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Jun 19, 2007, 08:02
Expat Village is edited and published by
Iain Williams in Caracas, Venezuela.
A Bloomberg story by Andrea Rothman and
Laurence Frost at www.bloomberg.com
Paris -- Airbus SAS is halfway to its yearend goal of winning 200 firm orders for the A350 jet after the first day of the Paris Air Show.
Qatar Airways agreed to buy 80 of the widebody, long-range aircraft. Kuwait's Aviation Lease & Finance signed for 12 and US Airways Group Inc. announced a preliminary agreement yesterday for 22. Airbus, based in Toulouse, France, used its home turf to tout orders and commitments valued at $42.6 billion, while Boeing won $4.4 billion in business.
Airbus squandered its position as the dominant planemaker with its bet on the 555-seat A380 superjumbo jet, which is two years behind schedule and will cut profit at parent European Aerospace & Defence Co. by 4.8 billion euros ($6.4 billion) by 2010. Boeing Co. has 584 orders for its 787 Dreamliner, while Airbus had 13 firm contracts for the A350 before the show. Boeing beat Airbus in orders last year for the first time since 2001.
"Any good news, Airbus gets the trumpet because they have to,'' said William Smith, founder of Smith Asset Management Inc., which oversees $80 million of assets in New York. ``Going forward there will be an even bigger disparity between the companies' order books.''
Boeing's total for the year as of May was 417, more than double the orders at Airbus, which said on June 7 it had a total of 201 contracts through the end of May. Yesterday Airbus won a total of 219 firm orders at the show.
Shares of EADS rose as much as 38 cents, or 1.6 percent, to 24.50 euros, and were little changed at 12:49 p.m. in Paris. Boeing dropped 75 cents, or 0.8 percent, to $97.40 yesterday in New York. EADS's stock has risen just 0.8 percent over the last two years, while Boeing has surged 51 percent.
Day's Work
"It was a good day's work,'' said John Leahy, Airbus's chief commercial officer, after more than a half dozen order briefings. ``As everyone asks in this industry, what are you going to do for me tomorrow?''
Boeing reported an order from Indonesia's PT Lion Mentari Airlines for 40 737s and a contract to sell six 777 freighters to General Electric Co.'s GECAS plane-leasing arm on the first day of the show. Both had been previously announced as orders from unidentified customers.
The A350 deals are a boost for Airbus in the most lucrative segment of the $60 billion-a-year commercial aircraft market, medium-sized, long-range jets. Airbus Chief Executive officer Louis Gallois has set the goal of winning 200 firm orders by yearend. The order from Tempe, Arizona-based US Airways is not yet firm.
Qatar Order
The Qatar A350s are worth $16 billion at catalog prices. The airline also bought three superjumbos, taking the total order value to $17 billion at list prices.
"Thus far, Airbus is having a good show,'' said JB Groh, an aerospace analyst at D.A. Davidson in Portland, Oregon. ``Seeing the A350 order from Qatar confirmed is comforting. Still, Airbus is playing catch-up.''
EADS on May 10 posted a third consecutive loss because of delays and risings costs at Airbus. The first-quarter net loss was 10 million euros compared with a profit of 522 million euros a year earlier. Sales fell 1 percent to 9 billion euros.
Boeing on April 25 said first-quarter profit surged 27 percent to $877 million from $692 million, beating analysts' estimates. Sales advanced 7.7 percent to $15.4 billion as Boeing increased shipments of the single-aisle 737, its best-selling model, by 15 percent.
Low Expectations
"Expectations have been low for Airbus,'' said Matthew Spahn, an analyst at TCW Group in New York, which owned 1.2 million Boeing shares as of March. ``They've shown in the past they've been a formidable competitor. I don't think Boeing has lost sight of that.''
Of 34 analysts who follow EADS shares, 10 recommend buying, eight say hold and 16, almost half, recommend selling, according to data compiled by Bloomberg. Of 21 analysts who follow Boeing, 12 recommend buying, seven holding and just two see the stock as a ``sell.''
Airbus also won a commitment from Emirates, the largest Mideast airline, to buy eight A380s valued at $2.55 billion. A final purchase would take Emirates' total order for the double- decker plane to 55.
Emirates expects the A380 to bring fuel savings of between 15 percent and 18 percent compared with a Boeing 777-300, President Tim Clark said.
The carrier also plans to buy 100 mid-sized, long-range planes and will choose between the A350 and Boeing's rival 787 ``in the next few months,'' Chairman Sheikh Ahmed bin Saeed al- Maktoum said.
GE Leasing
Airbus got a $4.2 billion order, at list prices, from GE's plane-leasing arm for 60 of the single-aisle A320 model series. Customers typically get substantial discounts from catalog prices with big orders.
Nouvelair, a Tunisian carrier, signed a firm order for two A320s. The engine choice hasn't yet been made. Air France-KLM Group signed a $1.9 billion pledge to purchase two additional A380s and 18 A320s. The order isn't yet firm.
The company also won an order for 25 A320s valued at $1.75 billion from S7, Russia's second-biggest airline, which will take delivery of the aircraft starting in 2009.
Expat Village is edited and published by
Iain Williams in Caracas, Venezuela.
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