Bloomberg News

Airbus Said Close to Order for 25 Planes From Kuwait Airways (2)

May 12, 2013

Airbus Said Close to Order for 25 Planes From Kuwait Airways

An employee works on a section of wing for an Airbus A330 single-aisle passenger aircraft at the company's factory in Broughton, U.K. Photographer: Paul Thomas/Bloomberg

Airbus SAS is close to sealing a purchase agreement from Kuwait Airways Co. for 25 aircraft in a deal valued at $4.4 billion based on list price, according to two people familiar with the matter.

The state-owned airline may sign the agreement as early as this month to purchase 10 Airbus A350-900s and 15 single-aisle A320neos, with deliveries starting in 2019, said the people, who asked not to be identified because the decision hasn’t been finalized.

Airbus won 616 orders by the end of April for the A350 series, which begins service before the end of 2014 and is designed to challenge Boeing Co.’s 787 and 777 widebody models. Boeing has begun marketing a successor to its 777, the 777X, though it hasn’t yet sought board approval to build the plane. Airbus wants to perform the maiden flight of the plane toward the middle of this year.

“The A350XWB is doing extremely well in Airbus’s core twin-aisle market, the Mideast,” said Richard Aboulafia, vice president of the Teal Group, a Fairfax, Virginia based forecaster.

A Kuwait Airways spokesman wasn’t immediately available to comment when contacted by Bloomberg News today. An Airbus spokeswoman said the manufacturer doesn’t comment on discussions with potential customers. Kuwait-based Al-Watan reported the plan to buy Airbus planes earlier today, without saying where it got the information.

Of the 616 A350 orders in the Airbus backlog, 414 are for the A350-900 model, 92 for the smaller A350-800 and 110 for the A350-1000.

Demand Strong

Demand has been particularly strong in recent months, with British Airways’ parent IAG SA committing last month to the purchase of 18 A350-1000s, more than doubling the European aircraft maker’s backlog for the largest variant of the A350 in less than a year.

The A320neo, which will offer new engines on Airbus’s A320 single-aisle series, has won 2,125 firm orders from 40 customers since Airbus began offering the model in December 2011.

As part of the purchase agreement, Kuwait Airways will also lease 13 aircraft from Airbus, with the first to be received in June or July, the people said. The airline plans to take all 11 of its A300s, A310s and A320s out of service by the end of this year, one of the people said.

Kuwait Airways, which expects to pay about 850 million dinars ($3 billion) for the order, chose Airbus over an offer by Boeing Co. (BA:US) partly because the cost was lower, one of the people said.

Kuwait Airways’ fleet of 17 planes is mainly comprised of Airbus jets, along with two Boeing 777s. The sale of the unprofitable flag carrier was approved by parliament in January 2008. According to a draft law approved by the Cabinet last year, 35 percent of Kuwait Airways shares are to be sold in the first three years.

To contact the reporters on this story: Fiona MacDonald in Kuwait at fmacdonald4@bloomberg.net; Andrea Rothman in Toulouse at aerothman@bloomberg.net

To contact the editors responsible for this story: Shaji Mathew at shajimathew@bloomberg.net; Andrea Rothman at aerothman@bloomberg.net


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