Arie Egozi/TEL AVIV
Airbus Industrie is set to conclude its first sale to El Al following the Israeli national airline's decision to split its medium-capacity fleet replacement order between the European consortium and Boeing.
El Al is to acquire a mix of aircraft and has ordered three Boeing 777-200ERs to replace its ageing fleet of five Boeing 747-200 passenger aircraft. The airline also plans to order either three or four Airbus A330-200s to replace its Boeing 767-200ERs and will finalise details of the Airbus deal in the coming weeks. Boeing's part of the order is worth around $400 million, while the A330 contract could be valued at up to $450 million, based on list prices.
The airline has not yet finalised the engine selection for the new fleets and is studying bids from all three engine manufacturers. A decision is expected soon. The Boeing 777s will be delivered between February and May 2001, with the A330s arriving in 2003.
Both manufacturers had offered aircraft packages which would satisfy the airline's entire needs, but El Al compromised and split the order because of heavy political pressure from both sides. The USA wanted the airline to retain its normal policy of ordering only Boeings, while Europe was keen for El Al to buy its first Airbus aircraft.
The original budget for the deal was around $400 million, but the split has increased the funding needs to some $650 million. As a result, the airline's board has instructed the management to conduct an evaluation of the airline's cashflow, based on operating the two types on different routes. This will be presented to the board by mid-November. Based on the results, El Al will make its final decision on the A330 deal and finalise the size of the order and the method of acquisition. The latter could include either direct purchases or a lease deal. Chase Manhattan bank acted as adviser to the airline on the funding structure for the new orders.
According to sources within the airline, the A330 deal will help El Al to implement its plan to sign a codeshare agreement with Swissair on the route to Israel, as the Swiss airline operates its A330s on this route.
Source: Flight International
