British Airways Places Order for 33 Boeing 747s

British Airways announced today it has placed an order for as many as 33 Boeing Co. 747 aircraft for a total of $6.9 billion over the next nine years, the airline’s biggest-ever investment in new planes.

British Airways said it is seeking extra passenger capacity as well as replacements for its older aircraft.

Analysts said the airline is placing this order now so it will not have to wait long for new airplanes amid growing world demand for aircraft to replace the aging world fleet.

“All they’re doing is protecting their position in terms of requirements. They didn’t want to be last in the queue,” said Dan White, an analyst with the London investment firm County Natwest Woodmac.

British Airways said it has placed firm orders for 21 new Boeing 747-400 long-range aircraft for $4.15 billion and has taken an option to buy 12 more for $2.8 billion.

Deliveries will start in 1992 and are expected to be completed seven years later, bringing British Airways’ 747-400 fleet to 42 aircraft on the basis of firm orders.

The company has bought 21 747-400s since 1986.

British Airways now operates 224 airplanes.

“The aircraft will provide extra capacity as well as allowing us to replace older Boeing 747 equipment,” British Airways Chairman Lord King said. “Our 747-400s are delivering good performance and proving popular with intercontinental passengers.”

Rolls-Royce won the $1.07-billion contract for the engines, the airline said.

King said British Airways obtained the right to convert any of the orders if Boeing develops a larger version of the 747.

There is a possibility that Boeing will produce a version with seating capacity for 450 to 600 passengers, compared with the current aircraft’s capacity of under 400.

British Airways also said it will begin a $53-million refurbishment program for its fleet of 747-100 aircraft to keep them operating at high standards until they are progressively replaced by the new fleet.

British Airways did not say how it will pay for the new airplanes. Analysts said they expect the airline to own some of the aircraft and to obtain leases on others to contain costs.

John Lawson, an analyst with Nomura Research Institute in London, said he would not be surprised if the airline sold ownership of some planes to a leasing company and then took out operating leases on them. Such arrangements are known as lease-backs.

British Airways has said it likes to own its aircraft, but that it has used operating leases on a short-term basis in the past to meet peak demand.

Aircraft values have held up well, analysts said. British Airways recently capitalized on the buoyant trend by selling some of its 737s for a handsome profit and then leasing them back.