Max Kingsley-Jones and Kevin O'Toole/LONDON
British Airways is in talks with engine manufacturer General Electric over a wide ranging aircraft refinancing package which would see the carrier take more GE-powered Boeing 777s in place of some of its outstanding 747-400s.
GE is understood to have made an approach to BA offering sale and leaseback on part of the airline's existing fleet to free cash for new 777 purchases. Observers estimate that the package could be worth $1.5 billion.
Few details of the deal have emerged and none of the parties involved has commented officially. Sources within GE, however, confirm that talks have taken place on the basis of a new 777 order.
The US manufacturer would gain a potential tax break and may also be angling to wrap up outstanding issues surrounding performance shortfalls on BA's GE90-powered 777s. The airline has a 40-strong fleet of 747-400s and holds delivery positions on a further 26.
BA has already confirmed order for 14 of these aircraft, powered by Rolls-Royce engines.
BA, however, has been taking a fresh look at its commitments in the light of the economic crisis in the key Asia-Pacific market, and a board meeting on 11 February took a decision over outstanding options on Boeing widebodies. The outcome is expected to be a slimming down of orders for the 400-seat 747-400 in favour of the smaller, 270-seat, 777-200IGW (increased gross weight) and, possibly, the stretched 777-300.
BA recently discussed leasing some Cathay Pacific R-R-powered Boeing 777-200s, but declined the Hong Kong airline's offer of some 747-400s, instead offering Cathay some of its own -400s.
Aprime target for the refinancing package is BA's 15-strong fleet of ageing 747-200s, of which only five are known to be on finance deals. The airline could expect the aircraft to raise about $20-25 million each.
BA's 747-100s were recently forward sold, but most of the airline's fleet of 747-400s, 757s and 767s are available for refinancing.
BA will equip its latest batch of 747-400s with R-R's improved RB.211-524G/H-T engine, and may also decide to retrofit its in-service aircraft, according to Flight International's sister on-line service Air Transport Intelligence.
Source: Flight International
