Airbus Offers "Healthy" Discount To QF And Others

Tue Oct 23, 2001 9:29 am

Airbus offers healthy discounts to net Qantas
By Sophie Hares

SYDNEY, Oct 22 (Reuters) - European aircraft manufacturer Airbus [ARBU.UL] said on Monday it would offer Qantas Airways Ltd healthy discounts to fend off overtures from rival Boeing Co. for its A$1.5 billion plane order.

Airbus chief commercial officer John Leahy, in Sydney to convince Qantas of the virtues of the A320 aircraft series over Boeing's 737-800s, said local media speculation the manufacturer would offer the airline discounts of up to 45 percent were


"It is a buyer's market after the events of September 11, obviously you can get better buys, terms and conditions than you could six months ago," Leahy told reporters in Sydney.

"You can't just say 45 percent off, you don't have markets like that for aeroplanes," he said, noting the US$52-55 million catalogue price on the A320.

Aircraft manufacturers rarely mention the possibility of discounts even though they are routinely written into sales contracts.

Leahy said Boeing often undercut Airbus by US$3-5 million on comparable aircraft, but he hoped to convince Qantas to take Airbus planes on the grounds of lower seat mile, maintenance and fuel costs.

Australia's biggest airline laid out its strategy last week to spend A$1.5 billion (US$765 million) to boost its fleet with 17 new planes, and take options on at least 40 more, as it tightens its grip on the domestic aviation market.

The carrier's plans to add 15 long range, narrow body aircraft to its fleet, alongside two Dash 8 planes, follows a major US$4.6 billion 10-year fleet upgrade unveiled last year, which included 12 Airbus A380 superjumbos, 13 Airbus A330s and six longer range Boeing 747-400s.

"Asia Pacific is by far the strongest market at this point, Australia is very strong," Leahy said, noting the manufacturer expected to receive an order from China but said it was tricky to set a timeframe.

Qantas is one of the few airlines around the world adding capacity as it fills the void left by Ansett Australia's demise, while its global counterparts slash services and defer aircraft orders as they struggle to stay afloat in the wake of the air attacks on the United States.


Airbus said aircraft United Airlines hoped to defer delivery on would be aircraft supplied to an Australian consortium formed by Melbourne businessmen Lindsay Fox and Solomon Lew, if its rescue bid for Ansett proved successful.

The 29 plane deal would begin with the 24 month lease of A319s and A320s, replaced at a later date with aircraft purchased directly from Airbus, Leahy said.

While United was keen for Airbus to find homes for aircraft due for delivery in 2002, Richard Branson's Virgin Atlantic

[VA.UL] was unlikely to push back its A340-600 aircraft due for delivery next year.

"If (Branson) wants to talk about delaying 2003, 2004 deliveries, we can always talk about that, but aircraft in production are very hard to move," Leahy said.

"I can't make them into themed restaurants in Toulouse, there's only so much use you can put to a finished aeroplane," he said.

Unlike rival Boeing, which has announced job cuts of up to 30,000 in its Seattle-based jetliner unit, Airbus was unlikely to slash its staff numbers unless its production dropped below 300 aircraft a year, Leahy said.

"Right now there are no job cuts planned, but if things were to go lower, then ... you'd have to look at that prospect," he said.

Airbus, majority owned by multinational aerospace and defence group EADS , currently has orders for 67 of its 555-seater A380 superjumbos and negotiations with a handful of airlines was expected to result in additional orders over the next five to six months, Leahy said.

"I still think that we are on target for somewhere around 100 aircraft, maybe it's going to end up 90 now, but I'd say by the end of the first quarter next year," Leahy told reporters.


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