Airbus surges ahead with orders from big buyers at Paris Airshow

The A321neo is the most efficient single-aisle jet currently in the market.

In a significant development, Airbus made a strong headway in getting orders and sealed deals with big buyers for its latest passenger jet, the A321XLR, at the Paris Airshow.

Indigo Partners, the private equity firm of veteran low-cost airline investor Bill Franke, and American Airlines have opted to purchase 50 A321XLRs; some orders converted from other models to Airbus’ latest long range jet.

Airbus, which has yet to announce a list price for the A321XLR, launched the new long-haul jet on Monday, with the aim to carve out new routes for airlines with smaller planes.

The clinching of these deals have amounted to a big vote of confidence for Airbus and it comes in the wake of one of its major customer – British Airways owner IAG – signing a letter of intent to buy 200 Boeing 737 MAX jets – a model that has been grounded since the two deadly crashes.

When asked to comment on the IAG letter of intent, Franke said, the A321neo is the most efficient single-aisle jet currently in the market.

Franke’s Indigo Partners signed a memorandum of understanding to buy 32 of A321XLR aircraft and to convert 18 existing A320 family jet orders to the larger model. These jets will be allocated to Hungary’s Wizz Air, U.S. carrier Frontier Airlines and Chile’s JetSMART, in which Indigo Partners owns stakes.

According to industry experts, the deal to purchase 32 aircrafts could be valued as much as $4.5 billion – based on a slight premium to the A321neo’s list price of $129.5 million; most airlines get significant discounts on list prices.

American Airlines, the world’s largest airline by passenger traffic, said 30 of its A321XLR order were conversions of existing A321neo orders to the new version.

“It costs a little bit more for these aircraft … (but they offer)… greater utility for us in the long run,” said American Airlines President Robert Isom.

Airbus also disclosed, it has reached a preliminary deal to sell, 11 A321neos to Taiwan’s China Airlines.

Airbus is steadily increasing its footprint in Asia.

Although airlines rarely switch suppliers due to increased cost of training and parts, this week’s Paris Airshow witnessed two such announcements.

Boeing’s deal with IAG caught many industry analysts by surprise. Not only did it enliven what was a more subdued air show but it also brought an end to the speculation that the aerospace cycle was being affected due to a slow down in economic growth and geopolitical tensions around the world.

So far, it is not clear how many of the 200 aircraft eyed by IAG would translate into firm orders and how many would be options. Incidentally, AIG has also placed an order for 14 A321XLR hours before the announcement of its switch with Boeing.

“It’s a great coup, but for now it’s a communications coup as it’s a letter of intent. We will see what kind of deal lies behind it,” said a European industry source.

Australia’s Qantas Airways stated, it will place an order for 10 Airbus A321XLR jets and convert a further 26 from existing orders already on the planemaker’s books.

Guillaume Faury, Airbus’ Chief Executive, predicted a pickup in orders after a slow start to 2019. He also voiced concerns about trade tensions and the growing risk of a no-deal Brexit.

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