UPDATE 2-Mexico budget airline orders 52 Airbus A320 jets worth $5.1 bln

Tomas Sarmiento
Monday, 21 Oct 2013 | 1:32 PM ET

MEXICO CITY, Oct 21 (Reuters) - Mexican budget airline VivaAerobus has ordered 52 Airbus A320-family jets from Airbus , an official at the European planemaker said on Monday, in a deal worth $5.1 billion.

The order includes 40 A320neo jets, said Rafael Alonso, Airbus Executive Vice President for Latin America and the Caribbean. The 40 A320neo planes have a combined list price of $4 billion.

News the airline would place a large order with Airbus was reported first by Reuters in June.

Airbus said VivaAerobus, which has previously used Boeing aircraft, had also ordered 12 A320ceo, with a combined catalogue price of $1.1 billion.

The defection of VivaAerobus to a new supplier follows a bitterly fought contest between the industry giants as the Mexican low-cost airline becomes the latest to compare the newest fuel-saving models offered by both planemakers .

The first plane will be delivered in April 2014 and the last in 2021, VivaAerobus Chief Executive Juan Carlos Zuazua told a news conference. The Mexican airline said it also has an option to buy another 40 Airbus A320neo planes in the future.

Zuazua said the "optimum mix" would be to split the deal between 60 percent purchased and 40 percent leased, and noted that the financing had not yet been finalized.

Many airlines reduce the burden of new aircraft on their balance sheets by selling their newly purchased aircraft on to third parties and then renting them back, an operation known as a sale-and-leaseback.

Industry sources have said United Technologies unit Pratt & Whitney, whose engines compete with GE/Safran venture CFM, could power the A320 jets. However VivaAerobus said the decision on the engines would be made within a month.

The arrival of a new generation of jet engines boasting double-digit percentage gains in fuel efficiency prompted both Airbus and Boeing to revamp their medium-haul, narrowbody models and triggered a worldwide battle for market share.

VivaAerobus, which launched in 2006, is a venture between Mexican transport company Grupo IAMSA and the family behind Irish low-cost airline Ryanair.

Roberto Alcantara, chairman of VivaAerobus, declined to comment when asked about reports that the airline is considering an initial public offering.

Monterrey-based VivaAerobus, whose existing fleet comprises 19 Boeing 737-300 aircraft, operates 51 routes in Mexico and two to the United States, according to the company.

VivaAerobus currently has about 12 percent of the market for flights in Mexico and just 1 percent of the market for international flights.

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