Qantas switches domestic fleet to Airbus in blow to Boeing

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  • Will buy 20 A321XLRs and 20 A220-300 jets
  • To replace ageing fleet of 737s and 717s
  • Selects Pratt & Whitney engines

SYDNEY, Dec 16 (Reuters) - Qantas Airways (QAN.AX) on Thursday picked Airbus (AIR.PA) as the preferred supplier to replace its domestic fleet, switching from Boeing (BA.N) in a major win for the European planemaker that also triggered an upheaval in engine supplies.

The Australian national airline said it had committed to buying 20 Airbus A321XLR planes and 20 A220-300 jets, along with options for 94 aircraft, pushing shares in France-based Airbus 3% higher in early European trading.

"This is a clear sign of our confidence in the future and we've locked in pricing ahead of what is likely to be a big uptick in demand for next-generation narrowbody aircraft," Qantas Chief Executive Alan Joyce said.

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Qantas is the latest airline to join a growing race for efficient medium-haul jets as carriers look past the pandemic to lower fuel costs and help emissions targets.

The agreement is subject to board approval, expected by June 2022 after negotiations with pilots.

Deliveries would start in mid-2023 and continue over 10 years to replace an ageing fleet of 75 Boeing 737s and 20 717s.

The win caps a successful week for Airbus after Singapore Airlines on Wednesday agreed to launch the A350 freighter and the planemaker looks poised to seize a narrowbody order from KLM, in what could become the second defection in 24 hours.

For Boeing, the loss of the coveted Qantas contract, first reported by Bloomberg News, is a further blow to its 737 MAX.

It interrupts a strong run of sales since the jet was cleared for flight late last year following a safety ban and means a further loss of narrowbody market share to Airbus.

Qantas has operated Boeing jets since 1959 and was once the world's only airline with an all 747 fleet. The U.S. planemaker will now supply only its long-haul 787 Dreamliners.

DOUBLE DEFECTION

Joyce said he was not concerned that his airline would be overly reliant on Airbus.

"I'm sure that Boeing will be very, very aggressive to maintain their relationship with us, which is a big one with the 787s, when other competitions come up," he told reporters.

Joyce said the flexibility to combine the Qantas narrowbody order with one already placed by low-cost arm Jetstar for more than 100 A320neos was a key attraction of the Airbus deal.

The world's third-oldest airline has been the scene of epic battles in the global plane duopoly including a hotly contested face-off in 2005 between the 787 and A350, which went to Boeing and prompted Airbus to tear up its original design.

The latest contest triggered a double defection as Qantas also switched to U.S. engine maker Pratt & Whitney (RTX.N).

Qantas plans to order the Raytheon Technology subsidiary's engines for the fresh batch of Airbus A320neo-family jets, having chosen CFM International engines from GE (GE.N) and Safran (SAF.PA) for much of the Jetstar order.

"Pratt & Whitney gave us the best arrangements," Joyce said. "We do feel that since both airlines will have a large amount of aircraft there are not mixed fleet issues."

CFM's engines are available on both Boeing and Airbus narrowbodies, meaning it has less incentive to weigh in with aggressive bids to help sway the aircraft choice, analysts say.

Qantas is separately looking at A350 widebodies capable of the world's longest commercial flights from Sydney to London. A decision on "Project Sunrise" is expected next year.

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Reporting by Jamie Freed in Sydney, Tim Hepher in Paris and Eric M. Johnson in Seattle; Editing by Peter Cooney, Richard Pullin, Elaine Hardcastle

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