Airbus makes sales pitch to AI:12 A380s, price tag $3.7 billion

Airbus makes sales pitch to AI:12 A380s, price tag $3.7 billion
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First Published: Wed, Oct 31 2007. 12 39 AM IST
Updated: Wed, Oct 31 2007. 12 39 AM IST
New Delhi: Airbus SAS is in negotiations with state-run Air India to sell as many as 12 Airbus A380s, the massive 525-plus seat aircraft that could revolutionize high-capacity air travel, officials at Airbus said.
If the sale takes place, it would be valued between $3.6 billion (Rs14,115 crore) and $3.7 billion. “We have one customer for the A380 (in India),” said Airbus chief commercial officer John Leahy, referring to Kingfisher Airlines Ltd, which has ordered five. “But we are almost certain they will not be the only one for long.”
Leahy was accompanying Airbus chief executive Tom Enders, the airline manufacturer’s fifth CEO in two years, on his first official overseas visit. Airbus is hoping to announce the deal by January, in time for a visit by the French President Nicolas Sarkozy, said an official at the French embassy in New Delhi who didn’t want to be named.
The National Aviation Co. of India Ltd, that was created earlier this year by merging Indian Airlines Ltd and Air India Ltd, is currently inducting a 111-aircraft order that was approved to replace and supplement its existing fleet.
The aircraft will be delivered by 2011, but a committee at Air India, the airline brand that was created post-merger, is looking to augment the fleet past 2012, said spokesman Jitendra Bhargava.
“The fact is that the need is there; the question is of deciding what number and which aircraft,” he said. “All aircraft manufacturers (slots) are chock-a-block full, so it also depends on how to get the aircraft by 2012.”
Airlines usually place orders years in advance—both Boeing Co. and Airbus have backlogs of few thousand aircraft yet to be delivered—and are often able to negotiate substantial discounts by ordering a large batch at once.
France-based Airbus, owned by the European Aeronautic Defence and Space Co., usually faces stiff competition from Boeing on major acquisitions.
For instance, Deutsche Lufthansa AG, which was the A380’s launch customer, picked Boeing’s 747-800 over the A380 for 20 aircraft order in December 2006 at list prices adding up to $5.5 billion, although analysts said at the time that it may have received steep discounts.
There is a possibility that Air India would split its orders between Boeing and Airbus, said an analyst with a Mumbai-based bank who is prohibited by his bank’s policy from being quoted by name, “just like it did the 111-aircraft order”. (In that order, Air India, which at the time focused on international travel, ordered 68 Boeing planes, and Indian Airlines 43 Airbus aircraft.) The list price of A380 is a little over $300 million.
Separately, Indian billionaire Vijay Mallya hired Accenture Ltd. to advise on the reorganization of his airline business after he took control of Deccan Aviation Ltd. to form the nation’s second-biggest domestic airline group.
Mallya, UB Group chairman said the management consultancy will submit a report in six weeks on how best to combine operations at low-fare carrier Deccan and his Kingfisher Airlines. The group also said it will allow foreign investors to buy stock to raise funds.
Subramaniam Sharma of Bloomberg contributed tothis story.
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First Published: Wed, Oct 31 2007. 12 39 AM IST