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Seattle Times aerospace reporter Dominic Gates covers top industry events to bring you the latest news, highlighting how it impacts Boeing and its competitors.

June 23, 2011 at 7:20 AM

Airbus nabs huge A320neo order to crown the Paris Air Show and jab at Seattle

Posted by Dominic Gates

AirAsia neo order.jpgApparently Airbus sales chief John Leahy can't dance. But he surely can sell airplanes.

At the main Airbus press conference at the Paris Air Show Thursday, he announced a blowout firm order from Malaysia-based low-cost airline AirAsia for 200 of the new single-aisle A320neos.

The star of the boisterous Airbus press show was AirAsia CEO Tony Fernandes, who supplied a long line-up of attractive young female flight attendants in their bright red uniforms as an eye-candy backdrop.

(My photo. Seated from the left are Leahy, Airbus CEO Tom Enders, Fernandes, and AirAsia deputy CEO Kamarudin Bin Meranun.)

It's the largest ever Airbus order by number of planes. And at a list price of $18 billion, it's the third largest order by dollar value.
(According to market data from aircraft valuation firm Avitas, the real price is more like $9 billion after standard discounts. But still. Massive.)

The AirAsia order, even larger than had been anticipated, brings the Airbus tally of orders and commitments for the A320neo -- featuring next-generation engines -- from 362 before the Air Show to an astonishing total of 1,029 on Thursday. Of those, 668 are firm orders.

It's a tally that must shake Boeing executives, though in public they stoically insisted Thursday that they are still pondering what to do in the single-aisle market.

Boeing unveiled orders for just 87 of its 737NGs at the Air Show.

Airbus CEO Enders didn't miss his chance to underscore the size of the Airbus victory.

"If after this Show our colleagues in Seattle still maintain that the neo is only catching up with their 737NG, I really have to ask myself, what stuff these guys in Seattle are smoking," Enders said.

The press conference was laced with such colorful remarks, more show business than airplane business.

As usual, the European planemaker makes Boeing's staid presentations, especially this year in Paris, seem very boring in comparison.

The highlight of Airbus's Media Cirque du Paris show was Fernandes's account of the long night the two sides of the sales negotiation spent together on Valentine's Day in February.

That party culminated in Leahy dancing for a signature on the dotted line of a memorandum of understanding that just last night in Paris became the 200-plane firm order.

Leahy said that his sales executive Kiran Rao was still busily hammering out the final details of the deal with Fernandes Wednesday night in Paris.

But the deal was committed to on Valentine's Day in southern France. And the story of how that night played out, as told by Fernandes, is impossible to imagine being told at a Boeing press conference.

Fernandes hilariously recounted how he, Leahy and Enders agreed the deal in a bar and were then joined by Airbus parent company EADS chief executive Louis Gallois.

But it was a Tuesday, and Fernandes has a personal superstition that Tuesday is his unlucky day. So he told them he wouldn't sign a memorandum of understanding until after midnight.

The agreement reached, what could they do until midnight but party? The group, which included some AirAsia flight attendants went to "a swish French club," Fernandes said.

At midnight, Leahy asked for the signature, but Fernandes said he wanted to see Leahy on the dance floor first. Leahy refused, saying "I don't dance."

But Enders, the Airbus CEO and a former German paratrooper, who by this stage had a tie around his forehead, gave Leahy an order: "John, Dance!"

Leahy complied, dancing with the flight attendants, though apparently not too impressively. "Rhythm is not one of John's strong points," Fernandes joked.

But Fernandes then duly signed the MOU and had ten of his flight attendants kiss the document so that it was plastered with lipstick smears.

"This is really what typifies the AirAsia/Airbus spirit," Fernandes said.

The Airbus way in Paris, in case it isn't clear, is to provide the press with as much color and fun as they can handle.

But behind all the fun and celebration is a spectacular business success for both Fernandes and Airbus.

When Fernandes bought a failed Malaysian government airline in 2001 to turn it into Air Asia, he had just two planes, both Boeing 737s.

Thursday's deal means that over the past six years he has placed orders with Airbus for 375 single-aisle A320s, 20 twin-aisle A330s and 10 larger twin-aisle A350s.

The carrier has a long-haul subsidiary AirAsiaX, which flies the A330s to Australia and China.

It also has four low-cost carrier subsidiaries in neighboring countries: Thai AirAsia, Indonesia AirAsia, VietJet AirAsia and AirAsia Philippines.

The current fleet of the entire group now stands at just over 100 airplanes with more than 300 more in the order pipeline.

The market served covers 600 million people in Southeast Asia, not counting India and China.

"Travel is going to explode in our part of the world," Fernandes said. "That's why we are doing this deal."

As for Boeing, the writing is on the wall: The Airbus A320neo is selling in huge numbers.

Airbus hasn't yet won a defection of a major Boeing customer. But rumors are swirling in Paris that at least one of the three biggest U.S. carriers -- American, Delta and United --is close to a deal to buy neos sometime this year.

And the airlines still don't know what Boeing is going to offer in the single-aisle market: a re-engined 737 or a still-undefined new small airplane.

Thursday morning in Paris, Marlin Dailey, the head of Boeing sales, said that if it is the latter choice it is "a decision for the next 30 or 40 years."

"So if we make it at the Paris Air Show or at the end of 2011, it isn't going to have a huge impact in the scale of things."

Meanwhile, Airbus is having a party in Paris.

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