Airbus 'in $3 billion Go talks'
LONDON, England -- Airbus has entered into exclusive talks to supply 75 planes to British no-frills airline Go, according to a report.
Boeing's 737 is currently the aircraft of choice among budget airlines but if Airbus can pull of an order worth an estimated $3 billion it would be a major strategic achievement, the Wall Street Journal said on Friday.
European-based Airbus is desperate to break Boeing's stranglehold on the low-cost aircraft market.
While traditional flag airlines have struggled to cope with a global economic slowdown and the events of September 11, low-cost airlines on both sides of the Atlantic are pushing ahead with rapid expansion as lower fares attract more travellers.
Go's two biggest European rivals Ryanair (RYA) and EasyJet (EZJ) expect annual passenger growth of about 25 percent. Ryanair, Europe's biggest low-cost airline, has ordered 150 737-800 aircraft from Boeing valued at about $9.7 billion.
Go's board decided on Tuesday to have exclusive talks with Airbus and plans to order a mix of A319s, A320s and A321s, the Journal reported. Airbus is 80 percent owned by the European Aeronautic Defence & Space Co (PEAD), based in France and Germany, and 20 percent by Britain's BAE Systems (BA-).
Executives at Go have said they intend to operate a single fleet type, which could mean the phasing out of its 25 Boeing Jets.
Low-cost airlines exclusively fly aircraft built by one manufacturer to keep down costs, like the training of pilots, engineering and servicing. The model was first established by the pioneer of budget airlines, Southwest Airlines of the U.S.
Go, two-thirds owned by venture capital firm 3i Group (III), with management owning the rest, could announce an order within a few weeks.
Go told CNN it would not comment on "discussions with partners" until they are complete, while Airbus said it was not in exclusive talks.
Aviation giants battle it out for Asia
April 24, 2002
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