IAG’s British Airways chooses Boeing 777 to replace ageing 747s

Boeing’s victory over the Airbus is evident over IAG SA purchase of 42 aircrafts worth US$442.2 million. (AFP picture)

LONDON: IAG will order as many as 42 Boeing 777 jets valued at up to US$18.6 billion, handing the US planemaker a victory over rival Airbus as it replaces its ageing long-haul fleet.

British Airways will take 17 of the largest 777-9 version of the wide-body jet, the company said in a statement Thursday.

IAG also took options on an additional 24 of the aircraft, which carries a list price of up to US$442.2 million before customary discounts. Bloomberg News reported earlier that IAG was leaning toward Boeing.

IAG advanced as much as 4.1%, as the London-based company reported annual profit that beat analysts’ estimates.

British Airways will use the planes to replace its fleet of 34 ageing 747s, which are due be retired by early 2024. Airbus had pitched the A350-1000, which BA has already bought to meet an earlier requirement, to fulfil part of the order.

The order for the re-winged 777-9 version of the Boeing wide-body provides a lift for the program, ahead of the revamped model’s factory roll-out and first flight this year. Sales of the new planes have sputtered after an initial order flurry.

The endorsement by one of the world’s premier airlines gives new lift to the 777X programme ahead of the upgraded model’s factory roll-out and first flight this year.

Analysts have questioned the size of the plane, which features the longest wings ever produced by Boeing and can seat upwards of 400 travellers, as sales sputter after an initial order flurry.

The order was announced as IAG reported adjusted operating profit advanced 9.5% to 3.23 billion euros (US$3.7 billion) in 2018, ahead of the 3.15 billion-euro average estimates of analysts. Revenue rose 6.7% to 24.4 billion euros.

“This was a very good performance despite three significant challenges: fuel prices increasing 30%, considerable air-traffic control disruption and an adverse foreign exchange impact of 129 million euros,” Chief Executive Officer Willie Walsh said in the statement.

Earnings this year are forecast to be flat, as long as fuel prices and exchange rates stay steady, the company said.

The shares were up 3.4% to 620.60 pence as of 8.09am in London.