Airbus Said to Near $5 Billion Jet Order From VivaAerobus

The Airbus A320neo
A model of the A320neo aircraft at the Paris Air Show in Paris. Airbus plans to begin delivering A320neos starting in late 2015, getting a jump on Boeing’s re-engined 737s due to enter service in 2017. Photographer: Chris Ratcliffe/Bloomberg

Airbus SAS is poised to win a $5 billion order as Aeroenlaces Nacionales SA, the Mexican airline known as VivaAerobus, expands and upgrades its fleet of aging Boeing Co. 737s, people familiar with the plan said.

The deal is for 40 narrow-body A320neos with new engines and 12 of the current A320 models, said the people, who asked not to be identified because the talks are private. VivaAerobus, Mexico’s fourth-biggest carrier, may announce the transaction as soon as next week, the people said.

Displacing Boeing planes would be a boost for Toulouse, France-based Airbus, and the airline would see fuel efficiency rise with the A320-family aircraft over older 737s. While Grupo Aeromexico SAB, Mexico’s largest airline, opted to buy Boeing models in 2012, closely held VivaAerobus is joining Interjet and Volaris in adding jets from Airbus.

Airbus has “been very aggressive and they’ve been rewarded for that,” said Richard Aboulafia, an analyst at Fairfax, Virginia-based consultant Teal Group. “They’ve been taking advantage of the disruption in the airline business there. When you don’t have the No. 1, you go after the new entrants and that’s been good for Airbus.”

The VivaAerobus purchase would be valued at about $5 billion based on Airbus’s published list prices, on which airlines typically get a discount.

October Meeting

Stefan Schaffrath, a spokesman for Airbus, declined to comment about a VivaAerobus order, as did Alejandra Ochoa, a spokeswoman for the Monterrey, Mexico-based airline. The carrier has sent invitations for a meeting in Mexico City on Oct. 21 that includes an announcement, without disclosing details.

Boeing doesn’t comment on “speculation about customer orders,” said Jim Proulx, a spokesman for the Chicago-based company.

Airbus plans to begin delivering A320neos starting in late 2015, getting a jump on Boeing’s re-engined 737s due to enter service in 2017. The people familiar with the discussions didn’t provide details on any timetable for the VivaAerobus planes.

VivaAerobus’s fleet is 19 Boeing 737-300s, according to the airline’s website. That version of the 737, the world’s most widely flown airliner, had its final delivery in 1999, Boeing’s website shows.

“It’s more economical to fly newer planes, so this will help VivaAerobus in terms of fuel consumption,” Fernando Gomez, an independent aviation consultant in Mexico City, said in a telephone interview. “All their competitors are renovating or increasing their fleets.”

Ryanair Connection

VivaAerobus was set up in 2006 by Ryanair Holdings Plc founder Tony Ryan in partnership with a closely held Mexican bus company. The airline is working with Barclays Plc to prepare for a possible initial public offering, three people with knowledge of the matter said earlier.

Airbus parent European Aeronautic Defence & Space Co. fell 0.5 percent yesterday to 48.32 euros in Paris, paring its year-to-date gain to 64 percent. Boeing has gained 60 percent in the same period, and closed at $120.34.

Mexico’s passenger traffic rose to a record in 2012 after expanding at the fastest pace since 2007. Carriers are jockeying to add planes as they try to fill the void created when Cia. Mexicana de Aviacion, formerly the country’s largest carrier, sought protection from creditors and ceased operations in 2010.

Aeromexico announced a 100-jet order from Boeing last year, and Interjet is taking Airbus aircraft as well as Superjet 100 regional jets from a joint venture between Moscow-based United Aircraft Corp.’s Sukhoi and a unit of Italy’s Finmeccanica SpA.

Mexico has become “an increasingly competitive battleground” for Boeing and Airbus, Teal Group’s Aboulafia said. “This market, both because of the growth rates and because of airline restructuring, makes it a pretty good bet.”

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