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Airbus Extends Jet-Sales Blitz at Air Show to Rout Rival Boeing

Tuesday, 15 Jul 2014 09:56 AM

Airbus Group NV extended its lead over Boeing Co. on the second day of the Farnborough Air Show by pulling in a record deal for single-aisle aircraft and bolstering sales of its new A330neo wide-body model.

The European manufacturer pushed out a rapid-fire string of announcements that included SMBC Aviation Capital Ltd. buying jets for $11.8 billion, followed by BOC Aviation Ltd. taking 43 single-aisle aircraft, as well as deals from two other leasing companies worth a combined $8.8 billion at list price. Boeing’s accords from two customers came in at $5.8 billion.

“Airbus has a fondness for air-show fireworks,” Richard Aboulafia, an aerospace analyst with Fairfax, Virginia-based Teal Group, said in a phone interview.

Airbus’s fast start at the aviation industry’s largest expo offered welcome news to a company that amassed only 290 net aircraft orders after cancellations during the first half, trailing Boeing’s 499. Toulouse, France-based Airbus also used the show’s opening day to offer an upgraded version of the A330.

The company may pack in more punch today when it wins AirAsia Group Bhd. as the first airline customer for the A330neo. The low-cost carrier group, run by Tony Fernandes, may order about 50 of the aircraft, people familiar with the talks said.

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Lessors’ Role

The annual forum, which alternates between Paris and Farnborough, spotlights the competition between Airbus and Boeing for global sales supremacy. The event brings together manufacturers, airlines, lessors, suppliers and inventors for a flurry of meetings and dealmaking.

Airbus owed most of its show bounce to lessors, whose support is important because they place jets with multiple airlines, a step toward ensuring wider customer acceptance of planemakers’ offerings.

The A330neo’s first buyer at the show was Los Angeles-based Air Lease, whose chief executive officer, Steven Udvar-Hazy, had urged Airbus to offer a version of the 20-year-old A330 with upgraded, more-efficient engines. Air Lease also booked an order for 60 of Airbus’s single-aisle A321 model.

Opening Day

AerCap Holdings NV said it would buy 50 A321neos worth $5.14 billion, the first jet purchase since the world’s biggest independent aircraft lessor bought Hazy’s former company, International Lease Finance Corp., for $7.6 billion in May.

CIT Group Inc.’s leasing unit said today it would buy A330 wide-bodies as well as single-aisle aircraft valued at $4.7 billion, before Avolon Aerospace Leasing Ltd. topped off the morning with the purchase of A330s for $4.1 billion.

The early results don’t fully reflect cur discussions that could yield more sales later in the year, John Wojick, Boeing’s chief commercial aircraft salesman, said in an interview. “Sales ebb and flow,” he said.

Boeing’s opening-day order book included five sales of its single-aisle 737 Max and six orders for the 787-9 Dreamliner, the newest version of the carbon-fiber plane, Avolon. The Bloomberg Industries tally for Boeing and Airbus included orders and options.

According to the people familiar with Boeing’s order discussions, BOC Aviation is set to commit to at least 50 of the Max jets. The people asked not to be identified because the details are private.

Discount Rates

Jet buyers typically negotiate discounted rates, so list-price aircraft valuations don’t translate directly into revenue. Planemakers also draw a distinction between firm orders, such as Air Lease’s agreement yesterday for A321neos, and commitments, such as the planned purchase of the A330neo.

For Airbus, keeping all of yesterday’s firm orders, and confirming the preliminary agreements, will be especially important after a first half marked by 225 cancellations. That compares with 54 for Boeing.

Sales of long-haul jets, a market where Boeing and Airbus share a duopoly, have cooled this year. Boeing announced just nine new wide-body orders in the first half of the year, while Airbus’s twin-aisle jet order book shrank by 21 jets.

Planemakers and customers are absorbing a record backlog of almost 11,500 commercial aircraft orders placed in recent years with a collective retail value of more than $1 trillion, according to data compiled by Bloomberg Industries.

“The persistent comment from commercial aerospace managements is that nothing has changed, they are still seeing a strong outlook,” Robert Stallard, an RBC Capital Markets analyst, said in a note to clients that cited meetings with company executives.

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Airbus Group NV extended its lead over Boeing Co. on the second day of the Farnborough Air Show by pulling in a record deal for single-aisle aircraft and bolstering sales of its new A330neo wide-body model.
Airbus, Boeing, air, show
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2014-56-15
Tuesday, 15 Jul 2014 09:56 AM
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