On the first day of the Paris Air Show, Qatar Airways gave Airbus its first big win and a vital lifeline for its proposed new jet that will...
PARIS — On the first day of the Paris Air Show, Qatar Airways gave Airbus its first big win and a vital lifeline for its proposed new jet that will compete against Boeing’s 787. But analysts were unimpressed.
Qatar said it will take 60 of the A350 mid-size jets, worth $10.6 billion, likely the largest order of the show.
At the same time, the Middle Eastern airline gave Boeing a substantial consolation prize: an order for 20 777s, worth $4.6 billion at list prices.
Qatar Chief Executive Akbar Al Baker also said his airline intends to make the 777 “the standard large widebody” in its fleet, phasing out current A340s and replacing them with the Boeing jets.
The A350 order won’t be enough on its own to make this show a success for Airbus. Analysts here are saying that International Lease Finance Corp. (ILFC), the large aircraft lessor that was looked to as a market bellwether for Airbus’ new jet, likely won’t announce for the A350 here in Paris.
And aviation experts are highly skeptical of the huge airplane orders that keep coming from the Middle East. Emirates, Etihad and now Qatar have all made multibillion-dollar orders. Emirates alone has ordered 41 A380s.
“There’s a whole bunch of airlines there making incredibly large orders that are not justified by the size of the population but are a product of oil prices being abnormally high now,” said Adam Pilarski, an analyst with Avitas who is attending the show. “There’s a 99 percent chance they’ll be canceled in the future.
“The fleet in the Middle East will be so huge it isn’t funny,” he added. “It can’t happen — unless the next time you fly to D.C. from Seattle you plan to fly through the Middle East.”
Byron Callan of Merrill Lynch, also at the show, gave a skeptical Wall Street perspective.
Referring to recent 787 wins with airlines that had formerly been A330 customers, Callan said, “Air Canada and Northwest Airlines speak more loudly than the orders at this show.”
Still, the Qatar order is enough to save Airbus from embarrassment in Paris.
Boeing had reserved 10 787 delivery slots for Qatar in hopes of winning the deal.
“We paid deposits for those delivery slots,” Al Baker said in an interview after the news conference. Internal Boeing documents indicate that delivery slots cost 1 percent of list price, about $1.3 million each.
But thanks to the simultaneous 777 order, Al Baker won’t lose any money: Boeing will simply roll over the $13 million deposit to the bigger jets, he said.
Qatar was an all-Boeing airline back in 1996. Today it is all-Airbus, with 40 A330 and A340 aircraft.
Al Baker said that operating A330s was a factor in the decision to choose the A350 over the 787.
But he also said Airbus offered “slightly better commercial terms.” He said the decision was a complex one involving price and number of seats.
The A350 list price is between $160 million and $180 million, depending on model. The 787 costs around $130 million at list price.
Airbus and Boeing dispute which of the two proposed airplanes has better per-seat-mile costs. The Boeing 787 is more efficient, but Airbus claims that it can fit 30 more seats in the A350 and claims a consequent 8 percent advantage in cost per-seat-mile — a standard airline metric of operating costs.
In a Boeing news conference after the Qatar announcement, 787 program chief Mike Bair disputed the seat-count advantage, saying that the floor space on the 787 is comparable to the A350.
But Al Baker said his airline did its own analysis of the seat count. “We don’t always go along with what the manufacturer tells us,” he said.
In Qatar’s particular configuration, the A350 came out better, he said.
With Qatar’s order, the A350 — though not launched and far from solid success — is at least in the game.
The 787 has a rival.
Dominic Gates: 206-464-2963 or email@example.com
Ryanair orders 5 Boeing 737-800s
European low-fare carrier Ryanair has exercised five options for Boeing 737-800 jetliners, Boeing announced yesterday.
No price was given, but at list prices, the five planes would be worth between $307.5 million and $347.5 million. Large customers such as Ryanair, which currently has 230 Boeing 737s on order, typically negotiate discounts to the list price.
The new planes are to be delivered in spring 2007.
The Associated Press