British Airways chooses Boeing 777 to replace 747s

[LONDON] IAG SA will order as many as 42 Boeing Co 777 jets valued at up to US$18.6 billion, handing the US planemaker a victory over rival Airbus SE as it replaces its aging long-haul fleet.

British Airways will take 18 of the largest 777-9 version of the wide-body jet, the company said in a statement Thursday. IAG also took options on an additional 24 of the aircraft, which carries a list price of up to US$442.2 million before customary discounts. Bloomberg News reported earlier that IAG was leaning toward Boeing.

IAG advanced as much as 4.1 per cent, as the London-based company reported annual profit that beat analysts' estimates.

British Airways will use the planes to replace its fleet of 34 aging 747s, which are due be retired by early 2024. Airbus had pitched the A350-1000, which BA has already bought to meet an earlier requirement, to fulfill part of the order.

The order for the re-winged 777-9 version of the Boeing wide-body provides a lift for the programme, ahead of the revamped model's factory roll-out and first flight this year. Sales of the new planes have sputtered after an initial order flurry.

The endorsement by one of the world's premier airlines gives new lift to the 777X program ahead of the upgraded model's factory roll-out and first flight this year. Analysts have questioned the size of the plane, which features the longest wings ever produced by Boeing and can seat upwards of 400 travelers.

The order was announced as IAG reported adjusted operating profit advanced 9.5 per cent to 3.23 billion euros (S$4.96 billion) in 2018, ahead of the 3.15 billion-euro average estimates of analysts. Revenue rose 6.7 percent to 24.4 billion euros.

"This was a very good performance despite three significant challenges: fuel prices increasing 30 per cent, considerable air-traffic control disruption and an adverse foreign exchange impact of 129 million euros," Chief Executive Officer Willie Walsh said in the statement.

The company announced in January it would walk away from bidding for Norwegian Air ASA after the low-cost carrier declined two informal offers. Mr Walsh said Thursday that IAG had completed the disposal of its Norwegian stake by mid-February.

Asked about potential interest in Thomas Cook Group Plc airline unit, Mr Walsh said on Thursday that IAG had not looked into it at all and it was not actively looking at anybody.

BLOOMBERG