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Boeing wins $10 bln Qantas jet order

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Boeing wins $10 bln Qantas jet order

By Daniel Morrissey

SYDNEY (Reuters) - Boeing Co. (BA) won a $10 billion order from Qantas Airways Ltd. to deliver 65 Boeing 787 Dreamliner jets, with an option for a further 50 planes, dealing a blow to rival aircraft maker Airbus.

The decision by the Australian carrier comes amid a record year in aircraft orders for Boeing and Airbus, which is 80 percent owned by European Aerospace Defense & Space Co. and 20 percent by Britain's BAE Systems Plc.

Qantas, the world's eighth-biggest passenger airline by market value, said it ordered 45 twin-aisled B787 jets with options for an additional 20.

The value of the 65 B787s was A$13 billion ($10 billion) at list price, Qantas said, adding it also took out purchase rights for an extra 50 B787 aircraft. The actual purchase prices of such major deals are typically made at a discount to the list price.

"We regard the firm orders and the options as basically a done deal," Qantas Chief Executive Geoff Dixon told reporters, referring to the first batch of 65 planes.

He said the B787 -- to have its first test flight in 2007 -- was chosen because of the price of the aircraft as well as its technology, fuel efficiency and the distance a B787 would fly.

"This plan will give us a modern fleet offering maximum flexibility, lower seat-mile costs and greater fuel efficiency," Chairman Margaret Jackson said in a statement.

In the weeks leading up to the Qantas deal with Boeing on Wednesday, Airbus took out full-page newspaper advertisements in Australia to promote its A350, a rival to the B787.

"It was a pretty tight decision," said Peter Harbison, managing director of the Center for Asia Pacific Aviation. "There is much more to this than just price. It's an important strategic move.

"It was also important to Boeing. If they had lost this one and you extrapolate, Boeing would virtually be out of Qantas, and that would have been a massive turnaround from, say, five years ago when it was an all-Boeing fleet."

Boeing and Airbus have recorded more than $100 billion in orders this year. Airlines are replacing older fleets by investing in more fuel-efficient planes to help lower costs.

The Qantas order will push Boeing further ahead of Airbus in 2005 order numbers. Boeing had 800 orders as of November 30, its Web site showed. Airbus had 494 as of October 31, according to its Web site, but it has since won a $10 billion deal to supply 150 single-aisle aircraft to China.


Qantas said the selection process for the engines to power the B787 would begin in February. Two engine makers are competing -- Britain's Rolls Royce Group Plc. and General Electric Co. (GE) of the United States.

Engines typically account for more than 20 percent of the overall aircraft price.

Qantas' first B787 delivery is planned for August 2008 for its Jetstar budget carrier, which plans to start flying to overseas destinations within 6-10 hours of Australia by January 2007. Jetstar will initially use A330-200 aircraft.

Shares in Qantas rose as much as 4.8 percent to near a 3-year high. The stock closed up 3.2 percent at A$3.87.

Qantas said it had sought tenders from Airbus and Boeing on ultra-long range variants of the A340 and B777, but had been unable to find an aircraft that could operate non-stop flights economically between Australia and London or New York.

Singapore Airlines Ltd. , the world's second-largest airline by market value, is also considering buying up to 70 wide-bodied planes for its fleet, industry officials say, in a deal that could be worth up to $10 billion at list prices.

Qantas' latest fleet investment plan is in addition to A$18 billion it budgeted for fleet renewal between 2000-2010. Qantas has already ordered 12 A380 superjumbo aircraft, with options for 10 more, and it expects to have 23 A320-200 planes by May 2006.

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