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British Airways Places Large New Airbus Order

By Rich Smith - Apr 23, 2013 at 11:16AM

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At list prices, the deal could total $12 billion.

European plane maker and EADS (EADS.F 0.95%) subsidiary Airbus announced Monday that one of its biggest, and most expensive planes, has just secured a big place in the airplane lineup at British Airways (BA).

International Airline Group (IAG), the parent company of BA, has signed a memorandum of understanding that lays the groundwork for the purchase of 18 Airbus A350-1000 airliners, and options to buy 18 more. If all planes contemplated by this document are ultimately purchased, it could mean as much as $12 billion in new revenues for Airbus at list prices, which are almost never the price paid.

The deal could grow even bigger, though. IAG is the parent company of both BA and Spanish carrier Iberia. And, according to the Airbus press release, IAG is also interested in buying A350s for Iberia once Iberia is "in a position to grow profitably, having restructured and reduced its cost base."

BA ordered a dozen of Airbus' massive A380 airliners back in 2007. (The first of those are expected to be delivered this summer.) The decision to add A350s to the fleet, said IAG CEO Willie Walsh in this week's press release, "will not only bring greater flexibility to our network but also more choice for our customer."

Airbus's A350-1000 is the largest model of the company's A350 XWB (Xtra Wide-Body) family of jets, seating up to 350 passengers in three classes, and with a flight range of up to 8,400 nautical miles. Airbus says that compared to its nearest "established" competitor -- apparently referring to Boeing's new 787, with which the A350 will compete -- the A350 XWB planes will be 25% more fuel-efficient.

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