Norwegian cancellations spark Airbus jet order deficit

Business

The disappearance of billions of dollars’ worth of orders from troubled budget carrier Norwegian Air has left Europe’s Airbus with more cancellations than orders so far this year, company data showed on Friday.

Norwegian last month obtained an Irish court’s agreement to cancel all 88 aircraft on order from Airbus as it staves off collapse. It remains at loggerheads with Boeing over the status of a separate order for 97 U.S. passenger jets.

The airline’s name was dropped from a monthly update of orders issued by Airbus on Friday, leaving the European firm with a negative total of 81 orders for January and February.

Hefty upcoming order cancellations on Feb. 23, on the eve of a court hearing at which agreement over the terms of the cancellation was announced.

The cancellation marks a turning point in the jet industry, nine years after Airbus and Boeing waged an epic contest for the young airline’s business.

After losing the main order battle to Boeing, Airbus struck a last-ditch deal to sell 100 of its own planes to help the airline set up its own leasing operation at a time of booming travel demand, people familiar with the negotiations said.

The deal was widely seen as a high point in a bruising market-share war between plane giants that weighed on prices and stoked trade tensions as budget carriers took advantage of cheap interest rates to scoop up the latest fuel-saving airplanes.

But the gamble did not pay off and Norwegian’s plans to diversify into financing, as well as losses at its core airline, left a hole in the production plans of both planemakers.

After growing rapidly to become Europe’s third-largest low-cost airline and the biggest foreign carrier serving New York and other major U.S. cities, Norwegian sought bankruptcy protection last November with debts over $7 billion.

Airbus said on Friday it had sold 10 A320neos to an unidentified customer. That reassigns part of the yet-to-be-produced fleet ordered by Norwegian, industry sources said.

Financiers say both jetmakers are expected to keep Norwegian’s deposits.

Airbus meanwhile said it had delivered 32 jets in February, bringing the total for the year to 53. Boeing delivered 26 jets in January, the latest period for which data is available.