This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ Explore more of Starbucks at Starbucks.com. http://www.starbucks.com/default.asp?ci=1015 \----------------------------------------------------------/ Airbus Hopes Orders Prove Boeing Wrong About Big Jet June 19, 2003 By EDWARD WONG LE BOURGET, France, June 18 - So, how big is the market for giant new jetliners with 500 or more seats? Forecasting that only about 320 would be sold over the next two decades, Boeing decided not to develop such an aircraft. But Airbus plunged ahead with its A380, and the pace of orders so far has the company crowing about its investment. Airbus said today at the Paris Air Show that it had reached agreement with Korean Air Lines to deliver five A380's. That agreement and a 21-plane order from Emirates Airline that Airbus completed on Monday brings the number of A380's ordered so far to 129, including 13 orders that are not yet final. The A380 is still three years away from entering service, and Airbus does not even have a prototype to show yet. Instead, it flew other model jets in here this week and had cabin mockups of smaller jets in an exhibition hall at the air show. Airbus plans to give a flight demonstration of the A380 at the next air show to be held here, in 2005. Even so, interest in the aircraft has been substantial outside the United States, especially in Asia. Singapore Airlines placed the first order in 2000, and will take delivery of the first jet off the assembly line in 2006. Emirates is the largest customer, with 43 on order, followed by Lufthansa, which has agreed to buy 15. Airbus and Korean have not signed a contract on the latest order, which includes an option for three more A380's. They have reached a memorandum of understanding, and the order will be completed within a few months, said John Leahy, the head of Airbus's civil aviation arm. The list price for the five planes is $275 million apiece, or $1.375 billion in all. Commercial aircraft are generally sold at a discount from the list price, and manufacturers always decline to give the actual sale price. Korean's five A380's are scheduled to be delivered from late 2007 to 2009. Industry analysts have said that the A380 might prove most popular with airlines operating in Asia and across the Pacific, where large numbers of passengers travel on long-haul routes through a few very busy hubs. Mr. Leahy said that Korean would probably set up its A380's with roughly 550 seats each and fly them between its base in Seoul and Los Angeles, New York, London, Paris and Frankfurt. "It's a huge operator of the 747 fleet around the world," Mr. Leahy noted. The 747, which is built by Boeing, seats about 400 and is the biggest plane now available for passenger service. Korean's A380 order is a "vote of confidence," he said. Executives from Korean Air were not at Airbus's morning news conference at the air show. Instead, Cho Yang-ho, the chief executive, said in a written statement, "Our decision to purchase the A380 aircraft meets our strategy to reinforce Inchon International Airport as the strongest hub in Northeast Asia." Airbus is a joint venture of BAE Systems and the European Aeronautic Defence and Space Company. In addition to deciding not to develop a jetliner much bigger than its largest 747, Boeing has shelved plans for a smaller but much faster jetliner that it hoped to develop. Boeing feared that it would not be able to sell enough of either type of new jet to repay development costs. "I don't think we're going to see a new, significantly larger airplane from Boeing, because the market is relatively small," Alan Mullaly, head of Boeing's commercial aviation arm, said today. Customers are still buying Boeing's current product line. On Monday, Korean Air reached a memorandum of understanding with Boeing to take delivery of seven 777's and two 747-400's, planes with list prices totaling $1.5 billion. If Boeing's market forecast is accurate, then Airbus has already booked orders for 40 percent of the number of A380's that Boeing thought it could sell in 20 years. Mr. Leahy of Airbus scoffed at Boeing's pessimistic forecasts. But when asked to give Airbus's own 20-year prediction, he demurred, and said instead that there would be demand for more than 1,500 planes of 400 seats or more - a much broader category that includes 747's and other planes as well as the A380. Tom Downey, a Boeing spokesman, said his company foresaw demand of more than 900 planes in that category. To serve it, he said, Boeing is studying ways to upgrade the 747 with more efficient engines, more lightweight composite materials and perhaps as many as 450 seats. As travel has slumped, many airlines and leasing companies have parked 747's in the desert because their size makes them difficult to redeploy to smaller routes or airports. Industry experts say the A380 is even more limited in how and where it can be used, while midsize planes like Boeing's 777 or the Airbus A340 are more easily shuffled around. Hossein Amir-Aslani, head of the airline and aerospace group at J. P. Morgan Chase, said at a meeting in Paris that there was a real question of how many airlines that have ordered A380's will actually take delivery of all of them on time. During the recent fear over severe acute respiratory syndrome, or SARS, the potentially deadly disease, Airbus found itself having to permit 31 planes to have their delivery deferred or to be paid for on more lenient terms, Mr. Leahy said. None of the deferrals exceeded a year, he added. No commercial airline in the United States has yet ordered an A380. Mr. Leahy said that Airbus was hoping to sell some to Northwest Airlines, which has extensive Asian and Pacific service. United Airlines serves the region as well, but it is operating under bankruptcy court protection and is unlikely to buy any A380's at the moment. http://www.nytimes.com/2003/06/19/business/worldbusiness/19JETS.html?ex=1057028997&ei=1&en=a4178777fe5ebad8 --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! 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