Boeing's Iraq Deal a No-Bid Win
CHARLOTTE, N.C. -- When the Iraqi government decided to spend a few billion dollars to buy jet aircraft to re-establish commercial aviation in their country, it didn't waste time talking with multiple bidders.
In fact, before placing a 30-plane order for the 737-800 from
Boeing
(BA) - Get Report
, the Iraqis did not solicit a bid from France-based
Airbus
, the world's only other big jet manufacturer. The order, which was announced Monday and represents a total list price of $2.2 billion, also included options for 20 additional jets.
Airbus was not offered a request for proposal (RFP) by the Iraqis, said Airbus spokesman Clay McConnell.
"We have had contact in recent years with Iraqi Airlines, but Airbus was not given an RFP and did not have the opportunity to compete for this contract," McConnell told
TheStreet.com
.
Said Boeing spokesman Peter Conte: "It is not uncommon for Boeing or for our competition to win no-bid contracts from certain customers."
Assisted Reconstruction
He added that Iraq's commercial airline -- called Iraqi Airways before the war, and Air Iraq afterwards -- is primarily a Boeing operator. "The individuals in Iraq who are involved in commercial airplane operations have a great familiarity with the Boeing product," he said.
Besides its order for 30 aircraft, the Iraqi government contracted options for 10 additional 737s, with a list price of about $75 million each, and the two parties are finalizing an agreement for 10 Boeing 787s, with a list price of $146 million to $200 million each. Typically, aircraft buyers do not pay list price, given the intense competition between Airbus and Boeing.
Aviation consultant Scott Hamilton called the uncontested award to Boeing "a payback for American involvement in the war," noting that the French were not backers of the war in Iraq. "I have to believe that given the close ties between the state department and the Iraqi government, there was probably a little discussion that this contract should go to Boeing and not to Airbus," he said.
Delivery dates are not included in Boeing's press release announcing the sale to Iraq, but Conte said the expected dates "are well into the next decade." That is understandable, Hamilton said, "given all the talk about how military planes have to corkscrew into the Baghdad Airport."
In a prepared statement made available by Boeing, Iraqi finance minister Bager Jabor Al Zubaidy said, "We are very comfortable with our selection of Boeing airplanes as the basis of our fleet renewal and pleased to count Boeing as a trusted partner in supporting our reconstructive efforts."
Besides providing aircraft, Boeing said it will assist with reconstruction of Iraq's aviation infrastructure, offering advice on airport development and aircraft maintenance (Iraq intends to fly used aircraft until the new ones arrive) as well as assistance in training aviation personnel.
"As we work together in support of Iraq's plan to build a national carrier, we envision the day when a modern and efficient fleet of airplanes will directly support Iraq's economic development and growth," said Scott Carson, president of Boeing commercial aircraft.
In addition to its Boeing order, Iraq ordered 10 CRJ900 regional jets from Canadian manufacturer
Bombardier
. The planes have a list price of about $400 million: Iraq holds options for 10 additional planes. It was not clear whether Bombardier competitor, Brazil-based
Embraer
, had bid for the contract. An Embraer spokesperson was not immediately available to comment.