Boeing Wins Key Order by Agreeing to Buy 17 Airbus Jets

Boeing Co. on Friday won a $1.9-billion order for 10 of its 777 jetliners from Singapore Airlines Ltd., in part by agreeing to buy some of rival Airbus Industrie’s jets in the Asian carrier’s fleet.

Singapore Airlines said it will exercise options taken in 1995 for the twin-engine 777 jets in return for Boeing’s commitment to buy 17 Airbus A340-300s. While the two plane makers have bought each other’s jets in the past to secure orders, Boeing said it has never bought so many Airbus planes at once.

The order is an important win for the Seattle-based company, giving its 777-200IGW model the dominant role in the Singapore carrier’s long-range fleet. It came at a considerable price, however, since Boeing will have to find customers for the aircraft made by its chief competitor.

Boeing “must think the 340 is a salable plane; they’re not buying those for their museum collection,” said Nick Heymann, an analyst with Prudential Securities.

The 777s are scheduled for delivery between 2001 and 2004. Singapore Airlines said the deal will allow it to phase out 15 A340-300 jets in its fleet and avoid taking two more A340-300s scheduled for delivery in 2003. The competing wide-bodied jets can each fly more than 8,000 miles without refueling and seat about 300 people.

The Singapore carrier got the option to sell Boeing its A340-300 fleet in 1995 when it agreed to buy as many as 77 Boeing 777s valued at $12.7 billion. It placed firm orders for 34 planes and took options for 43 more. It was the U.S. plane maker’s biggest order ever in terms of dollars.

Larry Dickenson, senior vice president for the Asia-Pacific region in Boeing’s commercial airplane group, said there’s nothing unusual about the agreement to buy Airbus jets.

“All of our transactions are very different,” he said. “From time to time, all [plane makers] have agreed to take in competitor’s airplanes.” However, he said he couldn’t think of another Boeing purchase as large as the agreement with Singapore Airlines.

Some analysts said the plan could still pay dividends. Boeing lost a crucial battle over Singapore’s fleet in 1998, when the carrier agreed to buy as many as 10 even longer-range Airbus A340-500 models worth $2.2 billion.

Those jets will fly 9,500 miles and be introduced in 2002. Boeing had been lobbying Singapore Airlines to be among the initial customers for its own longer-range versions of the 777, dubbed the 777-200X and 777-300X. It’s still trying to gather enough support from customers to introduce those planes by 2003.

“If SIA gets rid of their A340-300s, it raises questions about their A340-500 order, which was a crucial Airbus victory,” said Richard Aboulafia, director of aviation at Teal Group, an aviation consulting firm in Fairfax, Va. “It presents Boeing with a great opportunity.”