Firm battles Airbus for huge jet orders
Published: 6/06/2011 at 12:00 AM
Boeing says it has adopted a very aggressive pricing approach in the contest with rival Airbus to deliver 75 jets to Thai Airways International.
Boeing believes its B787 (top) offers superior value for money because of its fuel efficiency, while the 747 is still the best long-haul option.
While the US planemaker is gearing up to secure 100% of the orders in one of the largest fleet renewal plans in the world, it reckons this would be too ambitious.
"We would love to win 100% of the THAI business, but realistically that is probably not the way it is going to transpire," John Wojick, vice-president for Asia-Pacific sales of commercial airplanes, told the Bangkok Post.
"We would be very disappointed if we got less than 50% of the business. Airbus is a tough competitor though."
Competition brings out the best from both Boeing and Airbus, Mr Wojick noted.
Boeing believes its aircraft, including the state-of-art B787 "Dreamliner", offer value, especially fuel efficiency to serve THAI's long-term strategic business plan.
If all 75 aircraft were bought new from Boeing, the value could be in the region of US$9 billion (270 billion baht).
The Boeing team, led by Mr Wojick, was in Bangkok last week to advance the negotiations with the Thai flag carrier for the aircraft procurement deals that are expected to close in the next two months or so.
THAI is moving speedily to finalise deals with plane manufacturers and lessors as part of its fleet renewal that spans the next 12 years after securing cabinet approval last April.
The acquisition will come in two batches: 37 in the first phase between 2011 and 2017 with a budget of 210.6 billion baht, plus spare engines worth 5.47 billion baht, for a total of 216 billion baht, and another 38 from 2018-22 with a budget of 229 billion baht, plus spare engines worth 11.98 billion baht, for a total budget of 241.05 billion.
The first lot will be leased because new aircraft are not available directly from planemakers and THAI needs them sooner.
For instance, THAI needs to deploy 11 new narrow-body jets, either Boeing B737-800s or Airbus A320,s and part of the first batch in 2012 and 2013.
Because of the longer lead time, aircraft in the second batch will be purchased.
THAI has informed suppliers that it would decide on the first phase in the next few weeks and the second batch in 2-3 months.
Boeing is offering four types of aircraft: the single-aisle 737-800 for short-haul flights, the wide-bodied 777-300ER, the 787 and B747-8 jumbo for regional and long-haul flights.
Mr Wojick said Boeing was working with leasing firms such as International lease Finance Corp (ILFC) and GE Capital Aviation Services Ltd (Gecas) to make aircraft available to THAI.
At the same time, it is working with the US Export-Import Bank and many banks in this region to provide financial support for the purchases.
Asked whether he sees political impact arising following July 3 election on THAI's procurement plan, the American executive said there might be some. "But the good news is that THAI has approval to do this transaction and that is hopefully outside the political situation. It is more a business decision than political one."
Credit: Bangkok Post (www.bangkokpost.com)
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