Airbus Nears Deal With Nigerian Airline for About 50 A220s -- Update
February 13 2020 - 3:09AM
Dow Jones News
By Alison Sider and Benjamin Katz
European plane maker Airbus SE is close to securing a deal for
around 50 aircraft from a Nigerian startup airline that previously
announced plans to buy Boeing Co. 737 MAX jets, according to people
familiar with the plans.
The deal between Airbus and Green Africa Airways could be
announced as soon as Thursday, one of the people said. The carrier
would buy Airbus A220 planes, which seat about 130 passengers.
Boeing in December 2018 announced a commitment from the carrier
for 100 737 MAX jets, about two months after the first MAX crashed
into the Java Sea near Indonesia. That agreement, which Boeing at
the time said was its largest in Africa, came before the 737 MAX
fleet was grounded last March after a second fatal crash. The MAX
fleet has been idled since as Boeing works on fixes to the
plane.
The Chicago-based plane maker has temporarily suspended
production of the MAX as it tries to address the technical issues
with the jet and gain regulatory approval for it to resume flying.
Boeing's new Chief Executive David Calhoun said MAX production
could restart before the plane resumes flying in airline
service.
Boeing has struggled to win deals for its planes amid the MAX
crisis. Order intake last year fell to a 16-year low. The airline
booked no new orders last month.
The Nigerian startup airline turned to Airbus amid uncertainty
about when it would start receiving its MAX jets to be able to
commence service, according to a company executive. Boeing is aware
of the change in strategy and has been understanding of the new
airline's unique situation, the official said--the problems with
the MAX have meant Green Africa has had to postpone its launch.
The Nigerian carrier has support from some heavy hitters from
the airline industry. Tom Horton, former chairman and CEO of
American Airlines Group Inc., and Virasb Vahidi, American's former
chief commercial officer, are backing the carrier. The carrier is
run by Babawande Afolabi, who has been trying to set up a Nigerian
carrier for more than six years.
Airbus officials in recent months have played down the prospect
of taking advantage of Boeing's woes because its A320neo plane,
which competes with the MAX, is sold out for years. The deal with
the Nigerian carrier highlights, though, that the European plane
maker can still benefit from Boeing's troubles. The airline has
opted for a small Airbus aircraft that has been less popular with
airline buyers.
Boeing didn't immediately respond to a request for comment.
Airbus has separately reached an agreement with Bombardier Inc.
to buy out the Canadian manufacturer's remaining stake in the A220
program.
Bombardier will receive $591 million net of adjustments with
Airbus increasing its stake in the A220 to 75%. The government of
Quebec will own 25% of the program after the transaction, Airbus
said in a statement Thursday.
The deal ends Bombardier's involvement in the aircraft it
created, formerly known as the CSeries, after delays and cost
overruns forced it to initially hand over a majority stake to
Airbus in 2018. Airbus has since boosted sales of the jet by 64% to
658 aircraft at the end of January.
It releases Bombardier from its funding commitment that required
the company to cover up to $350 million in annual losses over a set
period as part of the initial stake sale.
Write to Alison Sider at alison.sider@wsj.com and Benjamin Katz
at ben.katz@wsj.com
(END) Dow Jones Newswires
February 13, 2020 02:54 ET (07:54 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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