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Lufthansa picks Boeing over Airbus for jet order

FRANKFURT -- In a blow to Airbus SAS, German airline Lufthansa AG said yesterday it would order 20 Boeing 747-8 planes, with purchase rights for 20 more, becoming the first carrier to order the new long-haul jet for passenger service.

The Cologne-based airline said it would start taking delivery of the wide-body planes in 2010 as it expands into North America and Asia. The airline also approved an order for seven Airbus A340-600 long-haul jets, due for delivery by 2008. The airline, whose 333-plane fleet is dominated by Airbus aircraft, already operates 13 of those planes.

Lufthansa said the order for all the planes had a list value of $6.9 billion; Boeing said its 20 firm orders had a $5.5 billion value at list prices, although customers typically negotiate discounts.

The move was even more striking considering that the parent company of Airbus, European Aeronautic Defence & Space Co., is a joint Franco-German operation.

"Lufthansa is noted for its careful aircraft selection. It must have been somewhat difficult to have made the decision that they did, given Germany's interest in Airbus," said Paul Nisbet, an analyst for Rhode Island-based JSA Research. "But they did it and I think all the major airlines will take notice. And all those that have 747 fleets will take a second look at this."

Lufthansa chief executive Wolfgang Mayrhuber said the new order would help it take some older aircraft out of service, making its fleet more efficient by reducing fuel and operating costs. It said they would also produce less emissions.

"Both aircraft types are sustainable investments in ecological efficiency," he said.

However, he also singled out the Boeing model for extra praise.

"With the orders for the highly modern B747-8, Lufthansa is setting standards. The Boeing B747-8 is more than just a derivative of the successful Boeing B747 series," Mayrhuber said.

For Airbus, the Boeing order was the latest in a series of strategic missteps.

After concentrating massive resources on its flagship A380 superjumbo, Toulouse, France-based Airbus has been outmaneuvered by Chicago-based Boeing Co.'s two-engine 787, which delivers better fuel economy than older four-engine Airbus jets in the same size category. Higher fuel prices have made the fuel-efficiency argument more persuasive.

The 555-seat A380's overall two-year delay wiped about $6.39 billion from profit forecasts over four years and has forced Airbus to consider basing assembly work on new models at a single site, rather than splitting it among several countries.

Lufthansa ordered 15 A380s in December 2001, but does not expect to take delivery of the first plane until December 2009.

Lufthansa has a variety of Boeing and Airbus planes in its fleet, including 92 Boeing 737s and 747s; 143 Airbus A300s, A330s, A340s, A319s, A320s and A321s. It also operates Avro regional jets, Canadair regional jets and 19 MD11Fs in its cargo fleet.

Airbus' delays in producing the A380 also played no part in Lufthansa's orders of the large Boeing jets, Lufthansa senior vice president Nico Buchholz said.

"It is a well-evaluated decision for the 747-8, rather than a decision against something else," he said.

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