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Wednesday, March 20, 2013 - Page updated at 12:00 p.m.

Airbus gets $24B order from Indonesian airline

By NICOLA CLARK
The New York Times

PARIS — Airbus said Monday that it had received a record order for new single-aisle jets worth $24 billion at list prices from the Indonesian low-cost airline Lion Air, marking a significant inroad for the European plane maker into one of the fastest-growing air-travel markets in Asia that until now has been dominated by Boeing.

The firm order, for 234 of the company’s popular A320- and A321-series jets, was announced by high-level executives of Airbus and Lion Air at a ceremony in Paris overseen by President François Hollande of France.

The deal represents the largest single order of Airbus jets, both by value and number of planes.

The Lion order’s actual value is about $11.3 billion, according to estimates by aircraft-valuation firm Avitas. Discounts from published prices are standard, and are particularly deep for large orders.

Rusdi Kirana, the travel entrepreneur who founded Lion Air with his brother Kusnan in 2000, said the landmark deal was the carrier’s first order from Airbus and included 60 current-generation A320s as well as 174 of the forthcoming neo series of A320s and A321s that will have more fuel-efficient engines.

Deliveries of the first planes, which sell for $92 million to $117 million each at list prices, were expected to begin next year.

In 2011 in Jakarta, President Obama attended an equally high-profile ceremony for the sale of 230 Boeing 737 jets to Lion Air, worth $22 billion at list prices. That order was Boeing’s largest-ever at the time, both in terms of value and aircraft numbers.

Hollande said the volume of Lion’s Airbus order was a sign of “the vitality of the Indonesian economy,” and he held up Airbus as “an example of what we want to achieve across all of our industries” in France and elsewhere across Europe. The Lion Air contract, Hollande added, was expected to guarantee at least 5,000 European aerospace jobs over the next 10 years.

The signing ceremony in the Elysee Palace served to kick off a series of events planned by the government this week aimed at promoting the manufacturing industry in France, which is struggling amid the economic downturn in Europe. Airbus has its headquarters and final assembly lines in the Toulouse area of France.

Despite only modest signs of a global economic recovery, many of the world’s established airlines are continuing to order jets at a rapid pace as they seek to upgrade to more energy-efficient models amid stubbornly high fuel prices.

Lion Air’s latest deal follows a flurry of jet orders announced last week, totaling more than $30 billion at list prices.

Lufthansa, the German flag carrier, announced orders for more than 100 single-aisle and wide-body planes from both Airbus and Boeing, while Turkish Airlines said it would purchase up to 117 Airbus single-aisle planes.

Ryanair, the Irish discount carrier, is also expected to reach a deal soon for up to $15 billion worth of Boeing 737 jets.

Meanwhile, emerging markets, particularly in Southeast Asia, are experiencing a boom in air-traffic demand as higher incomes give rise to a growing middle class. Over the past five years, air-travel demand in the Indonesian archipelago alone has grown at three times the average 6 percent pace of annual gross domestic product.

The spectacular growth in Indonesian air travel, however, has some air-safety experts concerned that the infrastructure and regulatory oversight in the country have been unable to keep pace with the expansion.

The European Union, for example, maintains a list of what it says are unsafe airlines, clearing only a handful of Indonesian carriers — including the flag carrier Garuda Indonesia — to operate in its skies.

Kirana, the Lion Air chief executive, said the airline — which controls 45 percent of the domestic market in Indonesia and flies to 70 destinations — now had more than 700 new aircraft on order for delivery from now to 2027.

Information from The Seattle Times is included in this report.


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