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South Africa to buy Airbuses

March 7, 2002 Posted: 1641 GMT

JOHANNESBURG (CNN) -- South African Airways (SAA), the money-losing state airline, has asked Airbus Industrie to overhaul its fleet at a cost of $3.5 billion.

SAA has ordered 6 wide-body long-haul A340-600 and 6 A340-300 aircraft. For its short-haul routes, SAA has selected 11 single-isle A319-100s and 15 A320-200s.

Airbus, the world's second-largest passenger jet maker, won the order after another tussle with arch-rival Boeing. SAA hopes to revamp its aging fleet of aircraft and cut costs to restore competitiveness and profitability.


"Boeing's aircraft are dated," Howard Wheeldon, senior research analyst at Prudential-Bache, told CNN. "Boeing's 737 is still the world's best selling aircraft but they have not kept up with Airbus in technology and cost efficiencies."

SAA plans to replace a fleet of aging Boeings, including 747s, 767s and 737s, over a period 8 to 9 years. The first Airbuses will be delivered in the last three months of this year.

"The renewal will enable SAA to meet noise requirements at overseas airports, fly more cost-effective, low-maintenance and fuel-efficient aircraft to ensure long-term profitability," South African Airlines CEO Andre Viljoen said.

The government-owned airline, which reported a loss of 735 million rand ($66.4 million) in the year ended March 31, 2001, does not have any Airbuses in its fleet of 60 planes. It spent $680 million in 2000 on 21 Boeing 737-800s.

The South African government recently said it will buy back 20 percent of SAA for 382.2 million rand from SAir Group, the holding company of bankrupt carrier Swissair.

Shares of European Aeronautics, Defence and Space Co. (EADS), which owns 80 percent of Airbus, rose 3.3 percent to graphic16.62 in early afternoon Paris trading Thursday. 


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