GO
Loading...

Airbus Sells 234 Planes to Lion Air in $24 Billion Deal

AFP | Getty Images

Europe's Airbus has signed a 18.4-billion-euro deal ($24 billion) with low-cost Indonesian carrier Lion Air for 234 single-aisle passenger planes, poaching one of archrival Boeing's fastest growing customers.

French President Francois Hollande's office on Monday called the deal with Lion Air, traditionally a client of Boeing, "the biggest for Airbus in terms of the number of aircraft and the overall sum."

The contract for the A320 planes trumped that between Lion Air and Boeing in 2011 for 201 planes worth $22 billion. Lion Air has been rapidly expanding its fleet to meet the need for medium-haul jets servicing the growing aviation market in Indonesia, the world's fourth most-populous country.

Shares in Airbus parent EADS were down about 2 percent on Monday.

The landmark order includes 109 A320neo and 64 A321neo planes— with the neo designating the newest fuel-saving type of the narrow-body jets—as well as 60 A320 "classic" planes.

While below a recent peak, airplane demand remains robust as airlines and lessors modernize fleets in a bid to drive down fuel costs, while emerging markets continue to grow strongly.

The deal surpasses a record 201-plane order for equivalent Boeing aircraft from Lion Air signed in front of visiting President Barack Obama in late 2011, sparking European claims of U.S. political pressure gthat Washington and Boeing denied.

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 is growing at 21 percent annually.

Reuters reported last week the two leading jetmakers were scrapping over a potentially rapid new order from Lion Air.

Rivalry

While below a recent peak, airplane demand remains robust as airlines and lessors modernize fleets to drive down fuel costs, while emerging market growth continues almost unchecked.

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

In deals totaling $35 billion, Germany's 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 Lion Air order marked at least the third attempt by Airbus to woo Lion Air, founded by travel entrepreneur Rusdi Kirana and long seen as a fortress for Boeing.

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

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.

Boeing outsold Airbus in 2012 for the first time in six years and remains ahead this year, according to monthly data.