UPDATE 2-British Airways gets first Airbus A380 in fleet upgrade

Thu Jul 4, 2013 10:11am EDT

* BA takes delivery of first A380, world's biggest commercial jet

* Part of $15 bln upgrade to top-end, fuel-efficient planes

* BA CEO says new jets to cut 100 mln stg from annual fuel bill

* Airbus upbeat on A380 after sluggish orders so far

By Rhys Jones

LONDON, July 4 (Reuters) - British Airways welcomed its first Airbus A380 jet, the world's biggest commercial aircraft, part of a $15 billion upgrade to top-of-the-range planes that will help cut fuel bills and give the airline a boost in the lucrative long-haul business travel market.

The emergence of the fuel-efficient double-decker through the grey clouds over Heathrow airport in west London on Thursday, was greeted by hundreds of British Airways (BA) staff and spectators, a boon to a group that has been weighed down by its ageing fleet.

The plane touched down on time and taxied into a hangar near Heathrow terminal five, met by cabin crew in uniform waving British flags. The first long-haul flight on the A380 will run to Los Angeles on Sept. 24, the airline said, slightly earlier than the originally planned October start.

"These aircraft are the start of a new era for British Airways," said Chief Executive Keith Williams, noting the British flag carrier hadn't had any new long-haul aircraft for 17 years.

Williams said the A380 was at least 15 percent more fuel- efficient than the planes it was replacing. So along with new planes it is buying from Airbus rival Boeing, he expects to save at least 100 million pounds ($152.6 million) from the airline's annual fuel bill of up to 4 billion pounds, by 2017.

BA, which was due to receive its first A380 a year ago but deferred delivery amid the 2009 banking crisis, is catching up rivals such as Emirates and Lufthansa that have flown A380s for years. Over the next 15 months BA will take delivery of new aircraft at the rate of one a fortnight.

BA's ageing long-haul fleet has put it at a "cost and quality" disadvantage to rivals, which run newer, more cost-effective planes that are also more comfortable and better equipped, Davy analyst Stephen Furlong said.

BA, part of IAG, received the first of its new Boeing 787 Dreamliners last month, making it the first airline in Europe to fly both new planes once commercial operations begin.

The aircraft are the centrepiece of a ten-year upgrade to BA's long-haul fleet, which will enable it to retire older, more fuel hungry Boeing 747-400 jumbos and shake up its network.

"These new planes will enable us to reshape our network by serving more emerging economies and adding services to the U.S. where we are a major player," said Williams.

IAG will need to wring all the profit it can 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, made an operating loss of 278 million euros ($361 million) in the first three months of this year, with Iberia causing 202 million of that as it suffered from competition from low-cost rivals and high-speed trains and labour disputes. BA broke even during the quarter, helped by business and first-class traffic.

NOISE AND CAPACITY

BA has 12 A380s and 42 Dreamliners on order for delivery over the next ten years. The A380 is built for use between major international airports, while the Dreamliner is intended for less-busy routes and uses lightweight technology.

Sales of the A380 have been sluggish over the last five years, with Airbus announcing 262 orders, of which 105 are now in service. Attention has turned to smaller, lighter planes like the Airbus A350 and the Dreamliner.

However, Airbus Chief Executive Fabrice Brégier saw a change with passenger numbers rising and airlines adding capacity again. "It's not a bad situation but there's more to do. We've delivered 106 A380s so far with 160 more to come," he said.

"The financial crisis in 2009 slowed the sale of big planes and airlines were over-cautious but I think confidence is back now. With growing congestion at airport and traffic increases over the next 20 years I see the need for 1,000 A380s."

BA's A380s, which will carry 469 people, will go a small way to helping it cope with capacity constraints at Heathrow.

The arrival of the A380s will be welcomed by bosses at Heathrow who plan to name and shame airlines found guilty of breaking noise limits at the airport as it seeks to win more public support for expansion plans.

Airbus says the A380 makes half the noise of Boeing's 747 - previously the world's biggest jet - during take off, while Boeing says its Dreamliner is equivalent to the sounds of heavy traffic when standing at a roadside.

BA's A380 has a lower seat density than many of its competitors, as it looks to lure more passengers to first and business class seats, the most profitable part of its business.

Its fleet modernisation program also includes orders for six new Boeing 777-300ERs, along with 18 Airbus A350 jets.

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