European plane maker agrees to deal with start-up US airline backed by David Neeleman
Airbus sells 60 A22-300s for $5.4bn to JetBlue founder
Airbus agreed to sell 60 A220-300 jets valued at $5.4 billion to a start-up US airline backed by JetBlue Airways founder David Neeleman, bolstering the aircraft’s prospects less than a month after the plane maker took control of it.
Deliveries will start in 2021, Airbus said on Tuesday during the Farnborough Airshow outside London. The deal marks the second major commitment for the A220 in a week, following an order of similar size with JetBlue itself. The value is based on list price, before customary discounts.
“After years of US airline consolidation, the conditions are improving for a new generation of US airline to emerge, focused on passenger service and satisfaction,” said Mr Neeleman, the majority investor in the new venture, which Reuters reported last month was tentatively called Moxy.
“The A220 will enable us to serve thinner routes in comfort without compromising cost, especially on longer-range missions,” Mr Neeleman on Tuesday.
The transaction bolsters Airbus’ efforts to quickly find new customers for the plane, which suffered from slow sales when it was controlled by Montreal-based Bombardier and known as the C Series. To make the jet viable, Airbus says it needs a “double-digit’’ reduction in supply-chain costs and is negotiating with suppliers to cut its expenses. The Toulouse, France-based plane maker assumed control of the programme on July 1 from Bombardier, which retains a minority stake.
The Neeleman deal ups the ante in the high-stakes contest between Airbus and Boeing in the lucrative market for single-aisle jetliners. Less than a week after Airbus closed its deal with Bombardier, Boeing announced a venture with Brazil-based Embraer to join forces on small commercial planes.
The A220’s sales chief said recently they he aimed to book a “triple-digit” number of sales by year-end - a figure that’s already been surpassed. JetBlue Airways last week ordered 60 A220-300 planes, the aircraft’s first sale since Airbus took over the programme. Airbus reckons the aircraft can secure at least half of the market for 100 to 150-seat planes over the next 20 years, which it estimates at 3,000 units, excluding its own A319 plane.
Bombardier spent more than $6bn to develop the C Series, equipping the aircraft with fuel-efficient engines, large windows and a wider-than-usual middle seat. But the programme ran more than two years late and about $2bn over budget.
Mr Neeleman also helped establish Morris Air, Canada’s WestJet Airlines and Brazil’s Azul, in addition to JetBlue, with which he no longer has any management responsibility.