Andrew Doyle/LONDON
BRITISH AIRWAYS has postponed a proposed $1 billion order for up to 60 regional jets. The airline says that it has not finished restructuring its regional operations in time for the purchase to go ahead.
BA had invited five manufacturers to tender for the huge order in January, and said that it was likely to make a decision around mid-year (Flight International, 24-30 January). Around half of the aircraft were to have been allocated to the carrier's German affiliate, Deutsche BA.
"We have decided to put the tender process on hold while we re-evaluate other aspects of our regional operations," says BA. "At the time [the tender was issued], we made it clear that, if we were to fund such a large purchase, changes would be necessary to other elements of our regional cost-base. That process is taking time to complete."
Rod Muddle, BA's head of planning, adds that, while the procurement "...could well be restarted in the future," the airline at the moment "...can't see a particularly sound business case for investing in new [regional] aircraft".
Sources close to the competition, suggest that the manufacturers' bids, were not as attractive as BA had expected, and that recent changes to the management following Bob Ayling's promotion to chief executive, also contributed to the rethink.
"BA was anticipating that the manufacturers would be fighting to kill each other to get its business," says one source. "The ValuJet [McDonnell Douglas MD-95] and SAS [Scandinavian Airlines System Boeing 737-600] deals had given the airline an exaggerated view of what they can get in the market today. They were too late, to get that type of deal."
The airline had been looking for three sizes of aircraft - seating 80, 100 and 120 passengers - and it had invited Airbus, Avro, Boeing, Fokker (which has since collapsed) and McDonnell Douglas to submit proposals. The carrier also says, that it may hushkit some of its existing 737-200s, but Muddle says that a decision on this has not yet been taken.
Source: Flight International
