Airbus and Boeing to split $3bn order

Air France, the ailing state-owned carrier, yesterday averted a political row by splitting a $3bn (pounds 1.8bn) aircraft order between Boeing of the US and Europe's Airbus Industrie.

The French transport minister, Bernard Pons, had wanted Air France to buy exclusively from Airbus, in which the French have a 37.5 per cent stake, but was overruled by Prime Minister Alain Juppe.

The airline will buy 10 Boeing 777 aircraft and 10 long-range Airbus A340s. It has taken out options to buy a further 10 777s and five more A340s.

Separately, American Airlines is set to announce a $6bn order today for 100-plus planes from Boeing. American, which is expected to merge transatlantic operations next year with British Airways, will use the order to revamp its fleet significantly. The carrier is expected to sell its fleet of MD-11 wide-bodied jets to Federal Express, the courier company, and to retire several ageing Airbus, Fokker and Boeing 727 aircraft.

The Boeing aircraft for Air France will be powered by GE90 engines built by General Electric of the US and Snecma of France. The 777 order replaces an order to buy 15 Boeing 767s and 737s which dated back seven years but which was frozen in 1994 after Air France ran into financial problems.

Air France already operates Boeing 737s, 767s and 747 Jumbos jets. Although Mr Pons had wanted the latest order to exclude Boeing, Christian Blanc, the airline's chairman, had to stick with Boeing for part of the order, otherwise cash deposits made on the original Boeing order would have been forfeited.

The Airbus deal, meanwhile, consists of only five new orders since it includes five A340-200s that Air France announced it was purchasing in June.

The unveiling of the American Airlines order with Boeing was contingent on a vote expected yesterday from leaders of America's pilots' union to put a new labour contract to itsmembership. The promise of a dramatically modernised fleet was thought to have helped conclude talks between the union and management.