Aerospace & Defense

British Airways owner IAG hints Boeing set to win new order over Airbus

Key Points
  • IAG boss Willie Walsh says he has had "very constructive dialogue" with Boeing.
  • The airline operator reported better than forecast earnings in the first quarter of 2018.
  • IAG has also poured some cold water on the purchase of Norwegian Air.
Willie Walsh, CEO of the International Airlines Group
Simon Dawson | Bloomberg | Getty Images

British Airways' parent company has offered a big hint that Boeing is in pole position to win a new order for wide-body aircraft.

The share price of IAG has risen more than 4 percent in European trade Friday after the company reported 280 million euros ($335 million) of operating profit for the first quarter, easily beating forecasts.

Speaking in a call following the results, CEO Willie Walsh told analysts that capital expenditure on planes in 2018 was likely to remain at around 2.8 billion euros.

Walsh added that he was in talks with both Boeing and Airbus on new wide-body aircraft, but hinted heavily that a fresh deal with the U.S. firm was close.

"We have had very constructive dialogue with Boeing on wide-body aircraft. We will be meeting them in the next few days," he said.

The airline chief said that he was also having "very good dialogue" with U.S. firm General Electric over new engines for both narrow and wide-body planes.

The Airbus A320neo (New Engine Option) takes off during its first flight event in Colomiers near Toulouse, southwestern France.
Regis Duvignau | Reuters

The news that Boeing could be set for IAG's business will come as a further blow to European airplane maker Airbus. The French-German giant has struggled to fulfill deliveries of its narrow–body A320neo jet to a number of airline operators because of problems with engine delivery.

IAG is looking to update its fleet with new A320neo planes and Walsh told analysts he was "disappointed with Airbus and had expressed that disappointment to them."

Norwegian deal fails to fly

In April, IAG announced that it had taken a near 5 percent stake in Norwegian Air leading to speculation that a full offer was in the pipeline. IAG confirmed Friday that it did subsequently make contact with Norwegian Air regarding a full offer, but no agreement could be made.

IAG's Q1 presentation said the firm is "considering its options with regard to Norwegian." Shares in the Scandinavian airline subsequently fell more than 10 percent in Friday morning trade.

A Boeing 737 passenger aircraft, operated by Norwegian Air Shuttle ASA, takes off at London Gatwick Airport in Crawley, U.K.
Simon Dawson | Bloomberg | Getty Images

Norwegian Air has attempted to disrupt the air travel industry by offering a budget long-haul model with a particular focus on transatlantic routes.

When asked by an analyst if Norwegian's strategy could succeed as a standalone business, Walsh simply replied "no" without being drawn further.