British Airways will announce it is to acquire up to 220 new aircraft, including up to 188 Airbus regional jets, during a visit to Airbus’ Toulouse base by the Prime Minister Tony Blair this morning.

Seventy five of the new aircraft will be delivered as firm orders with options on the rest. This represents the largest number of aircraft ever chosen by British Airways in a single deal and the largest single commitment yet made to the European consortium by any airline outside the USA.

All the new aircraft are substantially quieter than the models they will replace and will offer customers the best in comfort and flexibility.

Firm orders have been placed for 59 Airbus aircraft in the A320 family, with options reserved on up to another 129. The first 21 of the firm orders will be used by British Airways Regional on its routes from Birmingham and Manchester. The remaining firm orders and options are for use on British Airways UK domestic and European services from Gatwick, and by French and German subsidiaries Air Liberté and Deutsche BA. The aircraft will be fitted with V2500 engines made by International Aero Engines, in which Rolls-Royce has a 32.5 per cent stake.

Today’s announcement reaffirms the airline’s commitment to its British Airways Regional operations, which employ 1,000 people, mainly in Birmingham and Manchester. It also protects the jobs of a further 38,000 people employed by some 300 companies working directly on Airbus activities in the UK alone, or for Rolls-Royce at Derby, where a large number of the IAE engines will be built.

British Airways today also announces an order for another 16 Boeing 777s, with options on up to a further 16. Most of these will be the new extended range version of the aircraft, capable of flying up to 256 passengers and more than 16 tonnes of cargo non-stop on all but ultra-long-range routes. They will require different engines from the 777s currently in service with the airline. General Electric, Pratt & Whitney and Rolls-Royce have been invited to tender for their supply. Negotiations are underway.

Some of these new 777 orders substitute for existing orders for five 401-seat Boeing
747-400s. The first six of these 777s will be delivered in early 2000. The remaining 10 firm orders will follow, with the last delivered in 2002.

The “list price” of the 75 firm orders is £3 billion. This does not reflect discounts British Airways has negotiated or the expected proceeds of disposals of aircraft the newcomers will replace or the benefit of substituting some existing orders. The net cost to British Airways of the shorthaul and longhaul firm orders, including orders for three 777s announced in April, is around £1.4 billion.

Bob Ayling, British Airways’ Chief Executive, said: “We have ordered the right aircraft at the right time at the right price. This is a great investment in our future, made possible by the commercial success of British Airways.

“The new Airbus and Boeing aircraft will strengthen our ability to give our customers what they want - the most modern aircraft available offering greater flexibility and frequency. This order is particularly good news for the UK regions and the communities around the airports we serve. It is also good news for our shareholders and employees, and good news for jobs in Britain and Europe.

“Today’s orders are only feasible thanks to the cost efficiencies we have agreed with our employees as part of our business efficiency programme (BEP), particularly our agreement with the team at British Airways Regional which puts this business on a long-term profitable footing.

“The regional jet orders have been placed after one of the most exhaustive and competitive tendering processes in the history of British Airways. Airbus and IAE won by offering the better terms. We are delighted to be in a position to order Airbus aircraft for the first time - while remaining Boeing’s biggest customer outside the USA and ensuring we obtain the best deal for investors in our company.

“The new shorthaul and longhaul aircraft we are ordering today will give us maximum flexibility to respond to the newly competitive environment following the anticipated ‘open skies’ across the Atlantic and enable us to continue to improve shareholder value.”

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