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Airbus and Boeing to Vie for Multibillion-Dollar BA Order

Posted on: Wednesday, 20 July 2005, 06:00 CDT

British Airways has launched a review of its long-haul fleet requirements for the next 15 years in a move likely to result in an orders bonanza for Airbus and Boeing.

The review, expected to be complete within the next nine months, could lead to orders in the longer term worth billions of pounds. BA has 110 long-haul aircraft in its fleet which would cost about $20bn (pounds 11.5bn) to replace at list prices.

Martin Broughton, BA's chairman, told the annual shareholders meeting yesterday that the airline was likely to decide on the future shape of its long-haul fleet next year but that actual orders could still be some years away from being placed.

BA's long-haul fleet is currently made up entirely of Boeing aircraft but Airbus is hoping to use the review as an opportunity to break open the monopoly so far enjoyed by the American aircraft manufacturer.

Among the key decisions BA will have to take is whether to buy the 550- seater Airbus A380 super jumbo as opposed to the 450-seat 747X which Boeing is widely expected to launch. Another battleground will be in the 250- seater sector where Boeing's 787 Dreamliner is pitted against the new Airbus A350, which is expected to be given the formal go-ahead in September.

BA has not bought any new long-haul aircraft since 2000 when it placed a $2.6bn order for 16 wide-bodied Boeing 777-200s, so its long-haul fleet replacement will be one of the most keenly fought contests the airline industry has witnessed.

Both Mr Broughton and John Rishton, BA's finance director, stressed that the airline was not under any pressure to rush into ordering new planes because the longest any of the 747s in its fleet had been in service was 16 years when the aircraft had a life of 20 to 25 years.

Mr Broughton added that whilst the A380 was 'very much on BA's radar screen', it would like to wait until the double-decker plane entered service in the autumn of next year before deciding whether to place an order. 'The jury is out on the A380,' he told shareholders. 'None have yet been delivered, it is running late and needs more orders to make the programme viable.' Mr Rishton later said that BA could afford to wait 'a reasonable amount of time' before making up its mind.

Earlier Mr Broughton told the meeting, held amid unprecedented security at the QE2 centre in Westminster, that BA was reviewing its policy on fuel surcharges in light of the fact that oil prices looked set to remain high as far ahead as the airline could see. One option, strongly favoured by some executives, is to subsume the duty into the price of a ticket rather than levying it separately.

BA has raised the surcharge four times since it was introduced in May last year. It now stands at pounds 48 for a long-haul return and pounds 16 for a short-haul round trip.

This year BA expects its fuel bill to reach pounds 1.55bn " some pounds 450m more than the previous 12 months.

Source: Independent, The; London (UK)

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