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Wednesday, June 22, 2005 - Page updated at 11:42 AM

Qatar Airways picks Airbus A350 over Dreamliner

Seattle Times aerospace reporter

PARIS — On the first day of the Paris Air Show, Qatar Airways gave Airbus its first big win and a vital lifeline for its proposed new jet that will compete against Boeing's 787.

Qatar said it will take 60 of the A350 mid-size jets, worth $10.6 billion, likely the largest order of the show.

At the same time, the Middle Eastern airline gave Boeing a substantial consolation prize: an order for 20 777s, worth $4.6 billion at list prices.

Qatar chief executive Akbar Al-Baker also said his airline intends to make the 777 "the standard large widebody" in its fleet, phasing out current A340s and replacing them with the Boeing jets.

The A350 order won't be enough on its own to make this show a success for Airbus. Analysts here are saying that International Lease Financing Company (ILFC), the large aircraft lessor that was looked to as a market bellwether, likely won't announce for the A350 here in Paris.

But the Qatar order is enough to save the European jet maker from embarrassment.

Boeing had reserved 10 787 delivery slots it for Qatar in hopes of winning the deal.

"We paid deposits for those delivery slots," Al-Baker said in an interview after the press conference. Internal Boeing documents indicate that delivery slots cost 1 percent of list price, about $1.3 million each.

But thanks to the simultaneous 777 order, Al-Baker won't lose any money: Boeing will simply roll over the $13 million deposit to the bigger jets, he said.

Qatar was an all-Boeing airline back in 1996. Today it is all-Airbus, with 40 A330 and A340 aircraft.

Al-Baker said that operating A330s was a factor in the decision to choose the A350 over the 787.

But he also said that Airbus offered "slightly better commercial terms." He said the decision was a complex one involving price and number of seats.

The A350 list price is between $160 million and $180 million, depending on model. The 787 costs around $130 million at list price.

Airbus and Boeing dispute which of the two proposed airplanes has better costs on a per-seat-mile day. The Boeing 787 is more efficient, but Airbus claims that it can fit 30 more seats in the A350 and claims a consequent 8 percent advantage in cost-per-seat mile—a standard airline metric of operating costs.

In a Boeing press conference after the Qatar announcement, 787 program chief Mike Bair disputed the seat count advantage, saying that the floor space on the 787 is comparable to that of the A350.

For his part, Al-Baker said that his airline does its own analysis of the seat count. "We don't always go along with what the manufacturer tells us," he said.

In Qatar's particular configuration, the A350 came out better, he said.

Copyright © 2005 The Seattle Times Company



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