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News > International
Airbus wins $8.6B jet pact
September 29, 2000: 4:17 p.m. ET

Airbus gets Singapore Air pact for 25 super-jumbo jets; Boeing stock falls
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NEW YORK (CNNfn) - Airbus won on Friday an $8.6 billion order for 25 aircraft from Singapore Airlines Ltd., giving the European aircraft maker a huge boost in its battle with American rival Boeing Co.

The airline's purchase of 10 Airbus A3XX super-jumbo aircraft, with options for another 15, was a harsh blow to Boeing, which had been aggressively marketing its own super-jumbo 747X in Singapore.

graphicStock in Boeing (BA: Research, Estimates), the biggest exporter in the United States, fell on the news, losing $2.25, or 3.5 percent, to $62.25 in midday trading.

"We remain committed to the 747X family of airplanes despite Singapore Airlines' announcement today, " said Alan Mulally, president of Boeing Commercial Airplanes Group, a unit of Boeing.

"With the airlines, it really becomes the bidding war between only Boeing and Airbus," said Robert Milmore, airline analyst at Arnhold and S. Bleichroeder.

"There's risk in terms of putting plane orders out there at prices maybe not as attractive as you want, but Boeing can't keep losing all the business, and that's the pressure on them," Milmore added.

Singapore Airlines, Asia's most profitable airline, said it will be the first carrier to operate the 500-seat, double-decker super-jumbo Airbuses on high-density routes from Singapore to London, Los Angeles, San Francisco, New York, Tokyo, Hong Kong and Sydney.

"A larger aircraft also means a lower operating cost per seat, especially with the higher efficiency that comes with new technology," Singapore Airlines CEO Cheong Choong Kong said.

Airbus currently does not make a jetliner large enough to compete with Boeing's 416-seat 747-400 and sees the A3XX as its main weapon in the fight to break Boeing's 30-year dominance in the market, where the U.S. company's 747 jumbo has long had the field virtually to itself.

The A3XX is expected to cost $12 billion to develop, and has stirred debate in the airline industry over whether such a huge plane is viable.

One analyst said while the order is a setback for Boeing, it's not as crucial for the U.S. aircraft maker as a loss of the order would have been for Airbus.

graphic"I don't know if it would have killed the A3XX, but it would have been a major blow," analyst Chris Mecray of Deutsche Banc Alex. Brown said. "With the aircraft in its infancy, every order is important. For Boeing, losing the order is too bad, but it was not a must-win order."

Mecray said he believes Airbus gave Singapore very attractive terms to win the order.

"Singapore is an important airline. It's really the gateway to aircraft sales in Asia," Mecray said. "But at end of the day, one company with 10 aircraft is not going to make or break any program."

Airbus' first planned model, the A3XX-100, will seat 555 passengers, and the European aircraft maker said the largest A3XX model would be able to carry up to 650 passengers.

Boeing's 747X super-jumbo aircraft, which is scheduled for completion in 2005, will seat up to 522 passengers.

Airbus foresees a market for 1,200 aircraft with more than 400 seats over the next 15 years, while Boeing estimates demand at just a third of that. Boeing expects to begin developing its proposed 747X super-jumbo in six to nine months at a cost of about $4 billion.

To date, Dubai's Emirates Airline has placed an order for five A3XX's and taken options on another five, Air France SA has ordered 10 A3XX's, and leasing company International Lease Finance Corp., a unit of American International Group (AIG: Research, Estimates), ordered five.

Airbus, the Toulouse, France-based commercial aircraft maker, has said it needed 50 orders to make the project viable.

Airbus is 80 percent-owned by European Aeronautic, Defense and Space Co. (EADS), Europe's largest aerospace company, formed by the three-way merger of A駻ospatiale-Matra, the Dasa aerospace unit of automaker DaimlerChrysler AG, and Spain's Construcciones Aeronauticas SA, or Casa. BAE Systems PLC owns 20 percent

Shares in EADS closed up 0.54 euro to 19.85 euros in Paris trading, while BAE edged up 0.50 pence to 364.5 pence in London. Back to top

--from staff and wire reports

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: テつゥ 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices テつゥ S&P Dow Jones Indices LLC 2018 and/or its affiliates.