U.S. News

Airbus adds $7.2 Billion Indian Order to Paris Haul


Airbus added more multi-billion dollar orders to its Paris air show haul on Wednesday, but analysts said the bonanza did not herald a new dawn for the troubled European aircraft maker.

India's Kingfisher Airlines pledged to spend over $7 billion on new Airbus planes, including an extra 15 of its newest model the A350 XWB. Airbus sales chief John Leahy said the planemaker had won orders and pledges for 548 aircraft so far at the show.

Yet Airbus has yet to land a real heavyweight airline or leasing firm for the A350, said Richard Aboulafia, an analyst at U.S. aerospace consultants Teal Group.

"These orders are peripheral," he said, referring to Airbus' 350 announcements at Paris. "These are not the blue-chip carriers they need to endorse it," he said, noting airlines such as British Airways have yet to commit to the A350.

Kingfisher upped its earlier pledge to buy five mid-sized A350s with a deal to buy 20 and will also take five four-engine Airbus A340-500s, 10 A330-200s and 20 of the smaller A320 series.

Airbus had entered the world's biggest air show this week trailing rival Boeing in annual orders and under pressure to prove it could find buyers for the A350 XWB, its answer to the hot-selling Boeing 787.

Vijay Mallya, the flamboyant liquor tycoon who heads Kingfisher's parent UB Group, is already a major Airbus customer and helped stake new territory for India's aviation sector at the last Paris show in 2005, including a deal to buy the Airbus A380 superjumbo.

The latest order is worth a total of $7.2 billion at list prices, though discounts are common.

Airbus is keen to show it is back on its feet with the A350, a design which the planemaker had to change repeatedly before buyers came forth.

More Expensive

Much of the work in the last year has involved trying to convert those airlines which wanted earlier versions proposed to take the new, more expensive one.

In the wake of this year's air show, which lasts until June 24, analysts will be keen to see how well pledges are turned into real orders, and what impact pricing will have on the profits of Airbus parent EADS.

Boeing, which had 417 orders at the end of May versus 201 for Airbus, on Wednesday announced a $2.7 billion deal with Air France KLM for twin-aisle 777s and smaller 737s, but the deal was already in its books as an unidentified customer.

British aero engine maker Rolls-Royce has had a record few days at Paris as the only company currently offering engines for the A350.

The Kingfisher deal once firmed will mean $1 billion in engines and maintenance for Rolls.

Rival engine maker GE Aviation has backed away from the A350 project from now, uninterested in supplying an engine for the largest of the three variants, the A350-1000 XWB, which will compete with the Boeing 777 for which GE (GE in the parent company of CNBC) holds a strong sales position.

A second engine maker is considered an important step Airbus must take to widen the plane's appeal, aerospace analysts say.

Analysts are looking for Airbus to spell out what charges it will take for the fumbled launch in coming months.

Airbus has also had to pay compensation for customers of the overdue A380 superjumbo, though Kingfisher's Mallya said compensation for the plane was not part of his deal this time.

Airbus said it expects to finalize the airline's 50-plane order in a matter of weeks.