ECONOMY

Airbus in record 430 plane deal for $49.5 bln with budget airline backer Franke

John Leahy, Airbus Sales Chief, and Bill Franke, Managing Partner of Indigo Partners, pose during a news conference at the Dubai Airshow in Dubai, on November 15, 2017. (Reuters)

Airbus landed a deal for a record 430 of its A320neo-family jets on Wednesday as US investor Bill Franke raised his bet on budget airlines.

The preliminary deal, worth up to $50 billion, is designed to supply four airlines in which Franke’s Indigo Partners has stakes: Frontier Airlines, Mexico’s Volaris, Chilean carrier JetSmart and Hungary’s Wizz Air.

The 80-year old Franke signed the agreement at the Dubai Airshow amid a flurry of dealmaking, as airlines take advantage of a recent slowdown in demand for new aircraft to negotiate competitive prices from leading manufacturers.

The Airbus deal with Indigo Partners will see 273 A320neos and 157 A321neos split up among Denver-based Frontier, JetSMART of Chile, Volaris of Mexico and Wizz Air of Hungary, all ultra-low-cost airlines associated with Indigo.

The A320neo and the A321neo are twin-engine, single-aisle planes popular among airlines because of their reduced fuel consumption. 

FlyDubai opts for  Boeing 737 

Budget airline flydubai on Wednesday committed to buying 175 Boeing 737 Max jets, worth around $21 billion at list prices.

FlyDubai said the planes would bring the low-cost carriers total fleet on order up to 320. FlyDubai has begun to code-share flights with Emirates; both airlines are owned by Dubai’s government.

Boeing 737 MAX 10s, a twin-engine, single aisle plane capable of carry 230 passengers, have a list price of $124.7 million. They’ll complement FlyDubai’s fleet of Boeing 737s and keeps them a Boeing-only shop, something Airbus no doubt had hoped to change.

“Today marks the next chapter in FlyDubai’s success story,” FlyDubai CEO Ghaith al-Ghaith said.

Airbus said it expected to finalize its agreement with Franke in the coming weeks.

The two deals again underscore how budget carriers are rewriting the rule book by combining bargain fares augmented by optional services and upgrades for which passengers pay additional fees.

The Franke deal also marks a dramatic swan-song for Airbus sales chief John Leahy, who is due to retire in the coming months after holding the job since 1994.

The 67-year-old Leahy has overseen the sale of jets worth $1.7 trillion at list prices and helped engineer a rise in Airbus’s market share to a par with archrival Boeing from just 18 percent.

Airbus’ previous biggest-ever sale came in August 2015, when it sold 250 A320neos to Indian budget airline IndiGo, a deal estimated to be worth $26 billion at list prices. IndiGo and Indigo Partners are separate firms with separate management.

Shares in Airbus rose on the news, trading 2.7 percent higher at 85.75 euros in Paris in an otherwise lower market.

This year, however, Airbus’s share of the two giants’ combined order tally has dropped to 35 percent as a rejuvenated Boeing management made advances in Singapore and elsewhere.

Separately, the prospect of a deal to keep Airbus’s A380 superjumbo in production beyond the end of the decade remained in suspense, with main customer Emirates seeking guarantees on keeping production lines open.

“I think both sides will take stock and see if something can be agreed later this year,” an industry source told Reuters.

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Last Update: Wednesday, 15 November 2017 KSA 14:39 - GMT 11:39
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