Monday, May 7, 2018

Lufthansa makes $2.5 billion plane order in light of improving results, delivery delays

Germany's Lufthansa ordered up to 16 new planes worth 2.1 billion euros (1.84 billion pounds), including up to six Airbus A320ceos to make up for delivery shortfalls in a newer version of the jet and four long-haul Boeing 777s.

Lufthansa is among airlines hit by delivery delays to the Airbus A320neo, a version of the best-selling plane with new engines, and has partly curtailed growth plans as a result.

It therefore plans to order up to six of the older version of the jet, the A320ceo, depending on availability.

Lufthansa needs the planes because it is expanding capacity fast this year, mainly through its Eurowings budget brand, as it seeks to fill the gap left by the collapse of local rival Air Berlin.

"The plan is to deploy them at Lufthansa this year already, in order to offset delivery delays for Airbus A320neo aircraft," Lufthansa said in a statement. It also said it would convert six options for A320neos to firm orders.

In total, the orders for up to 16 planes have a combined list price of around 2.1 billion euros, although buyers usually negotiate discounts, and were approved by the group's supervisory board on Monday.

Along with the A320s, the orders include two Boeing 777-300ER long-haul jets for its SWISS subsidiary that are expected to enter service at the beginning of 2020, and two further Boeing 777F for Lufthansa Cargo, which will replace older MD-11 planes.

Both SWISS and Lufthansa Cargo reported improved first quarter results last month and Lufthansa said the order reflected their economic success.

The 777 orders will also be a boost for Boeing, which last month moved to ease concerns over output of the jetliner.

The aircraft are expected to be delivered through 2022 and the orders should have no impact on Lufthansa's 2019 investment plans, the company said in a statement.


(Victoria Bryan and Douglas Busvine - Reuters / Yahoo Business News)

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