Qatar Airways signs contract for 80 A350 jets worth $16 billion

PARIS: Qatar Airways extended a much-needed boost to European jetmaker Airbus on Wednesday by ordering 20 extra A350s, making the airline the largest customer for the wide-body jet with a total order of 80 planes worth US$16 billion (€11.8 billion).

A "memorandum of agreement" was signed by Qatar Airways President Akbar Al Baker in the presence of new French President Nicolas Sarkozy and Qatari Sheik Hamad bin Khalifa Al Thani. The A350 is Airbus' challenger to Boeing Co.'s 787 long-range, mid-sized aircraft.

"It's an enormous order," said Airbus Chief Executive Louis Gallois, who was also present at the signing. "It's one of Airbus' biggest ever orders."

He said that other orders could be in the pipeline, without giving more details.

The Qatar Airways agreement for 20 A350-800s, 40 A350-900s and 20 A350-1000s, would be worth some US$16 billion (€11.9 billion) at list prices, but such large purchases usually receive deep discounts. The agreement replaces an earlier one for 60 A350s signed in 2005.

Airbus has also been losing customers to U.S. rival Boeing in the market for mid-sized jets and was forced last year to launch a costly redesign of the planned A350 to compete with Boeing's 777 and 787 Dreamliner, due to enter service in 2008.

Wednesday's agreement comes after a report Tuesday in German daily Sueddeutsche Zeitung that carriers including Qatar Airways — but also Singapore Airlines Ltd., Emirates and the International Lease Finance Corp. — were pressing Airbus for changes to the A350's fuselage design. Airbus denied it planned any changes.

"Airbus is offering the A350 and continues to offer it with the composite panels which we believe are the best solution," Airbus spokeswoman Barbara Kracht said in response to the report Tuesday.

The European planemaker has bet heavily on future demand for superjumbos to serve the world's increasingly congested major airports, yet its A380 craft has been beset by legal, technical and managerial problems. Two years of accumulated delays to the 555-seater A380 have wiped more than €5 billion (US$6.6 billion) off Airbus' profit forecasts for 2006-2010. It also has also been suffering from a falling dollar — the currency in which it sells its planes.

Gallois said Tuesday that Qatar has expressed an interest in investing in Airbus parent EADS, but there have been no specific discussions about the state becoming a shareholder. Sarkozy has vowed his government will seek new investors for EADS, seeking changes to the shareholder pact as existing stakeholders Lagardere SCA and DaimlerChrysler AG seek to reduce their holdings.

The French state owns 15 percent of EADS, while Paris-based Lagardere owns 7.5 percent. Their combined stake is balanced by German holdings by Stuttgart-based DaimlerChrysler and a consortium of private and state-run investors.

Qatar is a U.S.-allied sheikdom in the Persian Gulf that sits atop the world's largest field of natural gas. The country of 800,000 is quickly growing rich on income from exports of natural gas, which is financing the rapid expansion of the capital, Doha, and bankrolling the state-owned airline.

A tourism boom in the Middle East is contributing to the region's air traffic growth, powering the rapid expansion of airports and airlines. The International Air Transport Association forecasts that international passenger air traffic in the Middle East will expand by an average annual growth of 6.9 percent until 2010.

Middle Eastern carriers currently account for just 9 percent of long-haul capacity worldwide, but are responsible for nearly a quarter of all global long-haul aircraft deliveries over the next decade.

Qatar and EADS will sign a contract next month in Doha for radar coverage across the Qatari region, according to David Martinon, a spokesman for Sarkozy.

Airbus claims its A350, made from carbon fiber wings and composites will be lighter per seat and more economical than existing crafts.

The 787's first test plane is scheduled to be ready in July with the plane entering commercial service next May. To date, Boeing has racked up 568 orders for the 787, which it says will be 20 percent more fuel-efficient than comparable jets.

Shares in European Aeronautic Defence & Space Co. NV fell 1.1 percent to €22.98 (US$30.94) in Paris.

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Associated Press Writers Christine Ollivier and Jim Krane contributed to this report.

Source: International Herald Tribune