Airbus A380 marks start to fleet modernization for British Airways

Wed Jul 3, 2013 3:17pm EDT
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By Rhys Jones

LONDON (Reuters) - British Airways receives its first Airbus EAD.PA A380 jet at Heathrow airport on Thursday, marking the start of modernizing its aging fleet with new, more fuel-efficient planes able to better compete with fast-growing rivals.

BA, part of International Airlines Group (ICAG.L: Quote), which received the first of its new lightweight Boeing (BA.N: Quote) 787 Dreamliners in June will become the first airline in Europe to fly both new planes when it launches passenger services with the two jets in September.

The aircraft are the centerpiece of a 10-year $15 billion upgrade to BA's long-haul fleet, which will include retiring the older and less fuel-efficient Boeing 747-400 jumbos.

"Over the next 12 months we will take delivery of new long-haul aircraft at an average rate of one every two weeks," said BA Chief Executive Keith Williams.

BA has 12 A380s and 42 Dreamliners on order for delivery over the next 10 years. BA's fleet modernization program also includes orders for six new Boeing 777-300ERs along with 18 Airbus A350 jets.

BA's ageing long-haul fleet has put it at a "cost and quality" disadvantage to rivals, especially deep pocketed Middle Eastern carriers such as Emirates EMIRA.UL, with newer, more cost-effective planes that are also more comfortable with superior facilities, according to Davy analyst Stephen Furlong.

IAG will need to wring all the profit it can get from its new jets if operational problems at its Spanish carrier Iberia continue to wipe out progress at BA.

IAG, Europe's third-biggest airline group by market value, had an operating loss of 278 million euros in the year's first three months, with Iberia contributing 202 million euros of that as it suffered from competition from low-cost rivals and high-speed trains and labors disputes.   Continued...

An A380 aircraft is seen through a window with an Airbus logo during the EADS / Airbus 'New Year Press Conference' in Hamburg January 17, 2012. REUTERS/Morris Mac Matzen