Airbus Wins Landmark Lion Air Order

 

Airbus Wins Landmark Lion Air Order

Airbus Wins Landmark Lion Air Order

Airbus has landed a record order potentially worth USD$20 billion at list prices from Indonesia’s Lion Air, sources familiar with the matter said on Sunday, breaking rival Boeing’s grip on one of the world’s fastest-growing airlines.

In a sign of the rising importance of Asian budget carriers for high-tech manufacturing jobs, the deal is set to be announced on Monday at a ceremony overseen by French President Francois Hollande, the sources said, asking not to be named.

EADS subsidiary Airbus declined comment.

France said earlier Hollande would meet Airbus chief executive Fabrice Bregier on Monday to celebrate “a major industrial deal,” but withheld further details.

The red-carpet event mirrors a record 201-plane order for equivalent Boeing aircraft from Lion Air signed in front of visiting US President Barack Obama in late 2011, sparking European claims of US political pressure which Washington and Boeing denied.

The sources said the new Airbus A320-family order from Lion Air, founded by travel entrepreneur Rusdi Kirana, could top that number.

Southeast Asia has emerged as one of the most fertile markets for popular medium-haul jets built by Airbus and Boeing, as rising incomes and a growing middle class boost air traffic.

Indonesia’s 17,000 islands and relatively robust economy, well insulated from Europe’s financial crisis, have made the world’s largest archipelago a magnet for aircraft sellers.

Its domestic aviation market, serving the world’s fourth largest population, is growing at 21 percent annually.

French newspaper Les Echos reported in its early Monday edition that the order, for over 200 Airbus jets, would include A320neos.

AIRASIA RIVALRY

While below a recent peak, commercial aircraft demand remains robust as airlines and lessors update fleets to drive down fuel costs, while strong emerging market growth continues.

However, there have been suggestions growth is cooling, prompting some carriers to buy aircraft only to lease them out.

In deals worth USD$35 billion, Lufthansa last week ordered 102 Airbus and Boeing jets, Turkish Airlines picked up 82 from Airbus and Ireland’s Ryanair is expected to sign for 170 Boeings.

The values represent official prices but in practice, strategic airlines win significant discounts for big orders.

The Indonesian order marks at least the third attempt by Airbus to woo Lion Air, long seen as a Boeing stronghold.

It is likely to throw the spotlight on an intense battle for market share between the largest plane makers.

It is also likely to add zest to a regional battle for supremacy between Lion Air and AirAsia, the low-cost carrier founded by Malaysian entrepreneur Tony Fernandes.

Lion Air is about to start up a domestic Malaysian rival to AirAsia, which has long been exclusively an Airbus operator. Some industry watchers have warned of a potential price war.

The airlines are respectively among the top buyers of Boeing and Airbus jets. Airlines rarely switch suppliers because of re-training costs and the burden of keeping extra spares, but the practice of “flipping” has grown as market share battles raged.

The Lion Air deal will be signed at the launch of France’s ‘Industry Week’ as part of efforts to boost domestic manufacturing.

(Reuters)



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