Friday, September 13, 2013

Lufthansa to Split Long-Haul Jet Deal Between Boeing, Airbus: Announcement Expected as Early as Next Week

September 13, 2013, 5:04 p.m. ET


The Wall Street Journal

Deutsche Lufthansa AG will split an order for long-range jetliners between Airbus and Boeing Co., giving the U.S. plane maker its first customer for the upgraded 777, according to three people familiar with the deal.

Lufthansa had previously signaled that it would place the order for dozens of jets with a single manufacturer, but dividing it would provide more flexibility as well as buying leverage by playing the archrivals off against one another.

A deal is expected to be announced as soon as late next week, according to one of those people.

The German flag carrier's goal was to allow for as much flexibility to switch between different-sized models over time, rather than buying one class of jet from both manufacturers. The A350 seats between 300 and 350 passengers, while the yet-to-be-launched 777X will carry 350 to 400.

The 777X order is expected to be for a 400-seat model of the twin-aisle twin-engine jetliner. The aircraft is expected to feature an all-new carbon fiber composite wing and General Electric Co. engines, and Lufthansa's deal marks the first commitment for the jet.

Boeing has yet to formally seek approval from its board of directors to move ahead with the program, contingent on securing sufficient commitments from airlines before the green light is given.

The official launch is widely expected to come in November at the Dubai air show, a major industry gathering. Hometown carrier Emirates Airline is the world's largest 777 operator in the world—flying 126 as of March 31, plus another 54 on order—and has been closely involved in the design of the new jet, due to enter service around 2020.

Boeing and Airbus, a unit of European Aeronautic Defence & Space Co., declined to comment on their respective negotiations with Lufthansa. News of the order was first reported by Bloomberg News.

European carriers have been on a significant buying spree the past several years, replacing aging less-fuel-efficient jets, despite a struggling continental economy. Those same carriers have also faced an onslaught of competition from Middle Eastern carriers that are growing rapidly and flying to faraway destinations once the hallmark of European long-haul flying. International Consolidated Airlines Group SA, parent company of British Airways and Iberia, placed commitments for up to 36 A350 and 18 787 Dreamliners earlier this year.