June 20, 2019 / 8:32 AM / a month ago

Airbus demands chance to bid for IAG's surprise Boeing 737 MAX order

PARIS (Reuters) - Airbus called on Thursday for a chance to compete for a blockbuster plane order by British Airways owner IAG, which stunned industry executives at this week’s Paris Airshow by ordering 200 of Boeing’s grounded 737 MAX.

Airbus announced a new version of its best-selling A321 with close to 240 orders and commitments in Paris, only to see its grip on IAG’s European short-haul networks damaged by the Boeing deal which analysts said shores up the embattled 737 MAX.

Boeing’s top-selling aircraft has been taken out of service worldwide since an Ethiopian Airlines 737 MAX crashed in March, five months after a Lion Air 737 MAX plunged into the sea off Indonesia. A total of 346 people died in the two disasters.

Tuesday’s blockbuster order, worth more than $24 billion at list prices, was partly seen as an effort to preserve competition between planemakers, damaged by the three-month-old grounding crisis. But it jolted Airbus which was caught unawares after signing a smaller order for A321XLRs with IAG.

Wrapping up the world’s largest air show on Thursday, Airbus publicly voiced its frustration over the deal and urged IAG to run a competition for the planes, which would be deployed at Vueling, Iberia, Aer Lingus, Level and part of BA.

“We would like a chance to compete for that business,” Chief Commercial Officer Christian Scherer told reporters, adding that IAG had not issued a formal tender for the narrow-body order.

IAG was not immediately available for comment, but said earlier in the week that it did not comment on negotiations.

Boeing declined comment.

FRAYED TRUCE

The shock announcement of a tentative order for 200 737 MAX jets from IAG stunned the industry and frayed an unusual PR truce between the world’s largest planemakers after Airbus had publicly supported Boeing over the grounding.

Commercial rivalry remains fierce, with Airbus launching its A321XLR - a longer-range version of its A321 - to try to reduce the space left for Boeing as it draws up designs for a new 220-270-seater in the so-called middle of the jet market.

Airbus reported 383 orders and commitments including 239 for the A321XLR. Boeing’s firm and tentative orders came to 247. Both are suffering from slower in demand after a long upswing.

FILE PHOTO: A Boeing 737 MAX 8 sits outside the hangar during a media tour of the Boeing 737 MAX at the Boeing plant in Renton, Washington December 8, 2015. REUTERS/Matt Mills McKnight/File Photo - RC1BB9F46A00

Shares in both companies rose less than 1 percent.

Airbus announced a last-minute order for 13 of the XLR jets from U.S. budget carrier JetBlue Airways, which is expanding into the cut-throat transatlantic market, joining a varied list of backers including American Airlines.

Airbus hopes to derail Boeing’s plans for a mid-market jet in a gap between traditional narrow-body and wide-body jets by dominating the lower end, where its A321 outsells Boeing.

But it is more vulnerable at the top end where its A330neo wide-body jet is up against tough competition from the newer Boeing 787. Airbus grabbed key orders from Philippines carrier Cebu Air and Virgin Atlantic, while Korean Air took 20 787s.

Yet the biggest issue hovering over the show was the grounding of the MAX, which secures supplier profits for the next decade, while on the defense side of the show a Franco-German pairing and Turkey each unveiled new fighter designs.

The IAG deal marked a psychological turning point for the five-decade-old 737 series though Boeing avoided wading into the traditional ding-dong with Airbus over who won the show, as it strikes a more somber tone than usual following the crashes.

Boeing did, however, say it was in talks with other airlines for sales of its 737 MAX after the IAG deal.

Slideshow (2 Images)

Senior Vice-President Ihssane Mounir dismissed the A321XLR as suitable for only a “sliver” of the market that Boeing hopes to win with its proposed all-new mid-market plane.

The two sides also traded blows over competition for wide-body jets, with each scoring key wins in Asia.

Boeing had opened the show on a subdued note with apologies over lives lost in the MAX crashes. It suffered a further setback when General Electric disclosed a delay of months in supplying engines for the new 777X wide-body aircraft.

Mounir said he still expected the world’s largest twin-engined plane to fly this year and to be delivered in 2020.

Additional reporting by Alistair Smout, Andrea Shalal; Editing by Keith Weir/Alexander Smith/David Evans

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