British Airways, through its parent, International Airline Group (IAG) confirmed the rumored selection of the A350-1000 for the British Airways fleet.  The order is for 18 firm orders plus 18 options as the carrier continues its long-haul fleet renewal and growth strategy.

The A350-1000 models will likely replace older Boeing 767 and 777 aircraft currently in service.  IAG, in this transaction, also secured future commercial terms and delivery slots for Iberia, which will be converted to firm orders after a successful restructuring at Iberia.

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Several elements of this order are quite significant:

1. This is somewhat a conquest for Airbus, as BA has been primarily  a Boeing 747, 767 and 777 operator for long-haul services.  While BA has had A380s on order since 2007, they have not yet taken their first deliveries.  With a second wide body type, Airbus will be well positioned with BA.

2. BA, as a key 777 customer, was a key target for the 777-X.  While the 777-X will be a larger aircraft than the A350-1000, it should have more competitive aircraft mile economics and better seat-mile economics, given its larger size, when introduced.  Was it simply timing for deliveries, or other factors that caused BA to move away from Boeing?

3. BA also has the Boeing 787 or order, but is yet to receive their first aircraft.  Given the massive delays, compensation negotiations, and continuing difficulties with that aircraft, could there have been an impact that crossed over from the 787 and caused a key customer to move to Airbus?

4. Of course, the A350 has Rolls Royce engines, which are British.  However, in recent years, airlines have been moving away from national content being a factor in aircraft decisions.

5. This order also includes delivery positions and commercial terms for Iberia, when the airline completes its restructuring and is ready to re-fleet.  We assume that IAG, negotiation for both carriers, reached a more favorable price point with the potential for a larger number of aircraft.  Could this 36 aircraft deal become 50, or even 72?  Quite likely.

The recent trend of primarily Boeing customers including Airbus in their fleet plans is growing.  The order at American Airlines seemed to break a logjam, with several all-Boeing carriers, including Norwegian and Lion Air, choosing Airbus.  The competition is getting hotter.  With Japan Air Lines now reportedly interested in the A350, could another long-term Boeing customer convert to Airbus?  It will be interesting to watch.

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