EADS says AMR deal profitable, denies 70 percent cut

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Airbus parent EADS said a giant deal to sell 260 jets to American Airlines last week was profitable and denied what it described as rumors that it had slashed prices by up to 70 percent.

Commercial Aviation Online reported that Airbus and Boeing had both offered aircraft to American Airlines, a unit of AMR Corp for around $30 million, which would cover either the re-engined A320neo aircraft or the rival Boeing 737-800.

That would represent a discount of 67 percent for the A320neo or 55 percent for the current model of Boeing 737-800, Reuters reports.
“The deal is profitable and absolutely in line with EADS and Airbus business plans,” an EADS spokesman said, adding he was responding to rumors of discounts of 70 percent.
“The rumors are completely unfounded. The A320 deal is a perfectly normal market deal and the A320neo deal fully acknowledges the value this brings to the customer.”

Airbus agreed to sell 130 existing A320 aircraft which have a list price of $85 million and 130 A320neo, a planned upgrade of the A320 with new engines and a list price of $91.2 million.

In what it described as the largest civil aviation deal, American also placed an order for 100 current Boeing 737s and 100 upgraded versions that Boeing plans to fit with new fuel-saving engines subject to the approval of its board.

Wells Fargo Securities said in a note on Monday that its own analysis of AMR filings pointed to a purchase price of around $30 million for the A320neo or re-engined 737, adding this could even work out at $27 million in today’s dollars.

The brokerage said this compared with third-party appraisal values of $45 million for the existing model of Boeing 737-800.

Aircraft manufacturers typically sell at discounts and prices are seen as especially keen when a new product is being launched. However, Wells Fargo said the prices which it had deduced from AMR securities filings would be “outstanding”.

Competition to win the American deal was seen as intense.

Aircraft analyst Scott Hamilton of Leeham Co reported during negotiations that the planes could be valued at $30 million.