Boeing beats Airbus to $4bn Malaysian deal

RUSSELL HOTTEN

Airbus, the European aircraft consortium, was dealt another blow yesterday when Malaysian Airline System announced that a $4bn (pounds 2.6bn) order for 25 planes was being placed with US rival Boeing.

The order for 15 Boeing 777s and 10 Boeing 747-400s was good news for Rolls-Royce, which also announced that it had secured a pounds 315m contract to supply 30 Trent 800 engines to power the 777s.

The world's two biggest commercial aircraft manufacturers had been in fierce competition for the Malaysian business, and Airbus, led by chairman Jean Pierson, would have hoped to have won part of the deal at least. McDonnell Douglas, the struggling US manufacturer in merger talks with Boeing, had also put in a bid.

Malaysian Airlines said it did not split the order because it could not afford to operate too many different types of aircraft. "There could only be one winner," said Tajudin Ramli, chairman of the airline. "We need to make our engineering more efficient, and this can be done by standardising the type of equipment we operate."

This is the second big deal that Airbus, whose consortium partner British Aerospace builds the aircraft's wings, has lost in as many months. A $12.7bn order from Singapore Airlines for 77 aircraft was awarded to Boeing in December.

Boeing captured two-thirds of the global market last year. Boosted by the dollar's weakness relative to European currencies, Boeing won $31.2bn in aircraft orders in 1995, compared with $7bn for Airbus.

An Airbus spokesman said yesterday: "We are very disappointed that the announcement was not in our favour." But he pointed out that Malaysian Airline is still the world's largest user of the Airbus A330, with 10 aircraft, and "so was still a very important customer."

Airbus was reported to have offered huge discounts to secure the deal, though the company firmly denied this and Mr Tajudin said he was unaware of any price-cutting. The Boeings were "slightly more costly, but they fit in more with our proposed destinations," he said. Boeing has also agreed to invest in Malaysia's fledgling aerospace industry as part of the deal. Airbus is believed to have promised to manufacture aircraft components in Malaysia.

Malaysian Airline has 65 Boeings in its current fleet of 96 planes. The new order, stretching over five years, with the first deliveries in 1997, would give it one of the largest Boeing fleets in the world. Mr Tajudin said the fleet expansion was in line with projections that passenger traffic in the Asia-Pacific region would grow by 13 per cent a year over the next five years.

Analysts said the R-R contract would not have a great impact on profits, but was important because it would strengthen the manufacturers presence in the booming Far East airline market.

Sandy Morris, of NatWest Securities, said the deal was exciting because R-R had fought off arch rival Pratt & Whitney, whose engines are used in Boeing 747s and Airbus AC-30s.