February 14, 2007
BANGKOK (AFP) - Thai Airways International agreed Wednesday to buy eight mid-size Airbus A330s at a heavily discounted price as part of a deal with the European planemaker over delays in delivery of its A380 superjumbos.
Thai Airways officials declined to give the final price for the aircraft but said they had started negotiations on the basis of the planes costing 100 million dollars each.
"The discount per aircraft is more than 10 million dollars each but we cannot reveal the exact amount," Thai Airways chairman Chalit Pukbhasuk said.
The planes are set to be delivered over the next four years, with the first arriving in October 2008, he said.
The deal is part of an Airbus package to compensate Thai Airways for the delayed delivery of six A380 superjumbos, which had been put back to 2009 from 2011.
Chalit said Thai Airways would now receive its first A380 in September 2010 but with the rest arriving by 2012.
Airbus had apologised to Thai Airways for the delay but the flag carrier had threatened to cancel its order if compensation was not agreed.
The official Airbus catalogue price for the A330, a long-range twin-jet, is around 180 million dollars each but sales, especially for larger orders, can be negotiated at much lower rates.
Chalit said the new A330s would be used to upgrade the existing fleet. He said that over the next five years, 24 planes would need to be replaced.
"We need new planes to replace the old ones. We are getting A330s at prices that are not expensive, enabling us to cut costs to increase our competitive adventages," he added.
The deal still needs approval from Thailand's transport ministry and the cabinet.
Choosak Ratanachaichan, an aviation analyst at Kasikorn Research Center, said the steep discount reflected the fierce competition between Airbus and rival US aerospace giant Boeing in the Asian market.
"Airbus cannot afford to lose a key customer as the aviation market in Asia has huge growth potential," Choosak said.
"Airbus needs Thai Airways to increase its presence in the Asia-Pacific region," the analyst said.
Thai Airways, for its part, is counting on the A380 superjumbo, which can carry 853 passengers, to fly to Paris, London and Frankfurt, as congestion at those airports means they easily cannot increase the frequency of flights.
Richard Pinkham, a Singapore-based analyst at the Center for Asia Pacific Aviation, said the delay was a major setback for the Thai carrier's expansion plans.
"It is definitely more than a small inconvenience for them. Thai Airways wants to be one of the region's biggest airlines and make Bangkok one of the leading hubs, and the A380 was a major part of both projects," he said.
Some 93 percent of the airline's revenue comes from international flights, with the rest from domestic routes. Among the company's foreign routes, flights from Bangkok to London, Frankfurt and Tokyo are among the most profitable.
The A380, the world's largest commercial aircraft, has been plagued with production delays which led US freight company FedEx to cancel an order for the freighter version in November.
Other customers for the passenger version have maintained their orders.