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Boeing out, Airbus in as Delta confirms $14 billion order

November 21, 2014

Delta's order is one of the iargest ever for Airbus from a U.S. airlineDelta's order is one of the iargest ever for Airbus from a U.S. airline
Delta's order is one of the iargest ever for Airbus from a U.S. airlinePhotograph by Andrew Harrer — Bloomberg via Getty Images

Delta Air Lines Inc confirmed on Thursday a $14 billion order for 50 widebody jets from Airbus Group NV (EADSY), a victory for the European planemaker that replaces older generation aircraft from Boeing Corp (BA) in Delta’s fleet.

The order includes 25 Airbus A350-900 aircraft and 25 advanced Airbus A330-900neo aircraft, Delta said. It follows a closely fought competition with Boeing, which had offered its 787 Dreamliner. Airbus emerged as the front-runner in part after it became clear its revamped A330neo could be delivered earlier than Boeing’s temporarily sold-out 787 Dreamliner, according to one person familiar with the discussions.

Delta plans to take delivery of the A350s beginning in the second quarter of 2017 and the A330neos in 2019. They replace Boeing 747-400 and 767-300ER planes, respectively, with 20% percent reduction in cost savings per seat, Delta said.

The order is, among other things, a much-needed boost for the U.K.’s Rolls-Royce Plc (RYCEY), which was tapped to supply its Trent XWB engines for the planes in a contract worth $5 billion.

Rolls-Royce had said at the beginning of the month it would replace its finance chief and to cut 2,600 jobs to save money, following two profit warnings in eight months.

The world’s second-largest maker of aircraft engines said the job cuts, which will mostly come in the Aerospace division and will take 18 months to complete, were designed to save around 80 million pounds ($128 million) a year once the redundancy programme was complete.

Rolls-Royce, which dates back to 1884 and has around 55,000 staff worldwide, has traditionally had lower margins than market leader General Electric, meaning it can be undercut by its rival.

Airbus’ local shares were up nearly 2% in Paris in early trading Friday, riding a broader rebound in the local market, while Rolls-Royce’s opened 0.5% higher in London.

(Additional reporting by Geoffrey Smith)