British Airways orders superjumbos

LONDON, England (AP) -- British Airways divided its largest aircraft order in nine years between Airbus and Boeing on Thursday, giving the European plane manufacturer an edge over its U.S. rival as the airline prepares to increase capacity on its long-haul routes.

BA's decision to book a dozen Airbus A380 superjumbos along with 24 Boeing 787 Dreamliners in a much-anticipated order worth $8.2 billion (€5.8 billion) at list prices ends decades of Boeing's dominance in providing planes to the carrier.

It is also a vote of confidence in Airbus' previously troubled double-decker A380 -- deliveries of the aircraft were delayed for two years because of wiring and other technical problems that cost the company billions of euros.

BA Chief Executive Willie Walsh said that the airline had opted for the A380 rather than Boeing's newly revamped 747-8 for environmental and economic reasons. Watch why this order by British Airways is significant »

The 525-seat Airbus plane will enable BA to increase capacity on its flights out of the congested Heathrow Airport, where takeoff slots are limited, to destinations including Hong Kong, Los Angeles and San Francisco.

BA will use the 250-seat Boeing 787s to build up new routes, including destinations that the airline's existing fleet of Boeing 767s and 747s cannot serve.

"We see opportunities in South America, Asia and North America," said Walsh.

The new planes will be delivered between 2010 and 2014, allowing BA to expand its capacity by up to 4 percent per year.

Analysts say that is important for the Europe's third-largest airline to keep up with competitors that have more aggressively expanded their long-haul fleets since the September 11, 2001, terrorist attacks in the United States. Virgin Atlantic Airways' passenger total grew 16 percent last year, eight times the growth at BA.

Walsh also stressed the green credentials of the airline's new purchases, noting they will "contribute significantly" to its target of improving fuel efficiency by 25 percent between 2005 and 2025.

BA has also taken options to buy 18 more Dreamliners and seven more A380s, and Walsh said that the airline is continuing to look at Airbus' medium-range A350XWB, which has been delayed until 2013 after unhappy customers forced an expensive redesign, and Boeing's 777-300ER.

"We didn't feel we had sufficient clarity on each so we are continuing negotiations over the next 18 months," he said.

Analysts said that the rivalry between the two plane manufacturers had likely resulted in a significant discount on the list prices for the order announced Thursday.

"Pricing may have played a role, as British Airways was able to play Boeing off against Airbus," said Howard A. Rubel at Jeffries & Co.

Collins Stewart analyst Andrew Fitchie said that BA probably paid closer to $6 billion.

Rubel said the A380 probably also benefited from its use of engines made by Rolls-Royce, which also power the 787 and have proved attractive to BA. The 747, on the other hand, is powered exclusively by General Electric Co.-made engines.

BA's shares rose 4 percent to 384.25 pence ($7.78) after the long-awaited fleet order announcement, which Fitchie said reinforced the fact that "BA looks cheap on every measure."

"The 30 percent discount to its peers reflects a lack of confidence in the outlook, driven by worries over the knock-on effect of the credit crisis to premium demand," he said. "We are optimistic that next week's September traffic stats release will show a good trading performance and we understand forward bookings and premium demand remain strong." E-mail to a friend

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