Boeing Co, the world's second-largest commercial aircraft maker, won a US$3.7 billion order from Singapore Airlines Ltd for 18 long-range 777s, beating out Airbus SAS, said people familiar with the plan.
General Electric Co will supply the engines, in a US$540 million order that would be its first from Asia's most-profitable carrier. An agreement in principle will be announced tomorrow, the people said.
PHOTO: EPA
The sale cements Boeing's position as the airline's leading supplier. Singapore Airlines' fleet already includes 53 of the 777s and only five Airbus A340s. Singapore Airlines is luring more passengers as tourists and business travelers return to the Southeast Asian region after last year's severe acute respiratory syndrome outbreak emptied flights.
Singapore Airlines "obviously expects some pretty heavy traffic,'' JSA Research analyst Paul Nisbet said. "They prefer the 777s. It's probably more efficient on the longer routes." Nisbet has a "buy" rating on Boeing's shares, which he said he doesn't own.
"SIA has completed its evaluation of aircraft under the current Request for Proposal issued to Boeing and Airbus. An announcement will be made on the outcome once the process is finalized, which will be very soon," the airline said in an e-mailed statement.
Dow Jones News Service reported the Singapore Airlines agreement earlier. Rolls-Royce and General Electric declined to comment. Spokespeople at Boeing and Airbus also declined to comment.
General Electric, the world's biggest maker of engines, is the only supplier of engines for the 777-300ER, Boeing's longest- range aircraft capable of flying 8,500 nautical miles. The engines' list price is US$15 million each.
The order is the first sale of 777s to the airline with General Electric engines. Rolls-Royce Plc is the engine supplier for all of the 777s in Singapore Airlines' current fleet.
Shares of Boeing rose US$0.31 to US$50.96 in New York Stock Exchange composite trading, while General Electric rose US$0.4 cents to US$32.55. Airbus's parent, European Aeronautic, Defense & Space Co., rose 17 cents to 21.43 euros in Paris. Singapore Airlines' shares fell almost 1 percent to S$10.90 at 10:07am today.
Singapore Airlines is Asia's biggest by market value and No. 2 worldwide by that measure, after Southwest Airlines Co. Its Airbus planes all have Rolls-Royce engines. The carrier also owns 29 of the 747-400 aircraft powered by Pratt & Whitney engines.
Airbus last year overtook Chicago-based Boeing to become the biggest aircraft maker after it delivered 305 planes to Boeing's 281.
The European planemaker probably will maintain its lead for the new few years with an order book of about 1,400 planes compared with 1,037 for Boeing.
Airbus, based in Toulouse, France, will deliver more than 305 planes this year, Chief Executive Officer Noel Forgeard said at the Farnborough Air Show last month, compared with 285 planned by Boeing.
Boeing helped build a place for its 777 in Singapore Airlines' fleet when it won a US$1.9 billion order in 1999 for that model partly by agreeing to buy from the Asian carrier some jetliners made by rival Airbus.
The airline exercised options taken four years earlier for 10 twin-engine 777 jetliners and as part of the agreement, agreed to buy from the airline 17 Airbus A340-300 jetliners -- a 777 competitor. Many of the jetliners hadn't even yet been delivered to Singapore.
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