Airbus closes on pounds 2.5bn BA deal

THE European aircraft manufacturer Airbus Industrie yesterday looked close to beating Boeing of the US to a pounds 2.5bn jet order from British Airways, although senior executives at the airline insisted the competition was still open.

The BA board may decide between the two manufacturters at its monthly meeting a week today. However, it was stressed that a decision could easily be deferred until August. "The position at the moment is that we are still talking to both companies and have not yet taken a final decision," said one BA executive.

The order is for up to 100 jets to operate BA's short-haul European routes from Manchester and Birmingham. If Airbus is selected it would be a huge coup for the consortium, marking the first time it has won an order from BA.

The choice is between the Airbus A320 family and the latest version of the Boeing 737. BA is likely to place an initial firm order for 30 jets with options to buy a further 70. Engines could either come from the International Aero Engines consortium, which includes Rolls-Royce, and is offering the V2500 or a partnership of General Electric of the US and Snecma of France, which makes the CFM56.

When it announced the competition, BA said it expected the two aircraft manufacturers to make imaginative proposals to lessen costs for the airline. One solution could be for BA to lease planes by the hour, leaving everything from maintenance to residual values in the hands of the manufacturer.