Iberia Inks $2.6bn Deal With Airbus

Airbus late last week signed a preliminary $2.6bn deal to supply 76 aircraft to Iberia, its largest single European order.

The deal, to replace the Spanish state-owned carriers medium-haul fleet, was won after a tough eight-month contest with Boeing.

It means that the Iberia parent airline, due to be privatised by mid-1999, will eventually be using only Airbuses on its domestic and European routes.

The bulk of its short and medium-haul fleet has up to now been made up of Boeing and McDonnell Douglas aircraft.

But Josep Pique, Spanish industry minister, insisted that the choice had nothing to do with Spains participation in the Airbus consortium in which the state-controlled aerospace manufacturer, Casa, holds a 4.2 per cent stake. Iberia had been given absolute freedom to choose its new aircraft, he said.

 

Jean Pierson, Airbuss outgoing managing director, described the negotiations as very difficult.

The deal, said by Iberia to be Europes biggest civil aircraft order for at least a decade, covers three versions of Airbuss narrow-bodied airliner, the A319, A320 and A321, with capacity ranging from 126 to 187 passengers. The airline already has 22 A320s.

A final contract, including the choice of engines, is expected to be signed in spring, covering 50 firm orders and 26 options, for delivery up to 2004.

The aircraft are to replace Iberias Boeing 727s, DC-9s, and old wide-bodied A 300s, and to cater to growing demand.

Xabier de Irala, Iberia chairman, said a third of the aircraft would be bought outright with the remainder leased.

The deal, valued at Pta400bn ($2.6bn), would mean the airline would be running fewer different kinds of aircraft, bringing savings in operating, maintenance and training costs.

The three Airbus models share the same cabin and flight controls.

With Spain negotiating to bring in British Airways and American Airlines as minority shareholders in Iberia, the airline hoped virtually to double its pre-tax earnings this year to Pta35bn, after a seven-fold increase in 1997 to Pta18.4bn, he said.

In addition to the new Airbuses, Iberia would buy eight more Boeing 757s, completing a half-fulfilled contract which it signed in 1990. But it planned to phase the aircraft out of its fleet by the time the last of the Airbuses was delivered.

At the same time it would transfer its current MD-87 aircraft to its domestic sister airline Aviaco, already operating the similar MD-88.

To cope with demand, Iberia recently reached an agreement to take 11 aircraft into its network from its Spanish rival Air Europa, complete with crews.