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Qantas Snags 40 Airbus Jets, Snubbing Boeing

European jet maker Airbus's 40 planes ordered by Qantas have a list price of at least $4.6 billion, a media report says.
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Australia’s flagship airline Qantas  (QABSY)  said Thursday that it’s buying 40 Airbus  (EADSY) - Get Airbus SE Report aircraft, dealing a blow to Boeing  (BA) - Get Boeing Company Report.

The European jet maker’s 40 planes have a list price of at least $4.6 billion, Bloomberg reported. 

In a statement, Qantas refrained from giving the actual price but said it’s a “a material discount” from the list price.

“Qantas has selected the Airbus A320neo and Airbus A220 families as the preferred aircraft for the long-term renewal of its domestic narrow-body fleet,” Qantas said.

“A firm commitment for 40 aircraft – 20 A321XLR (extra long-range) and 20 A220 aircraft – is expected to be placed with Airbus by the end of fiscal 2022. ...

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“Qantas will also have a further 94 purchase-right options on aircraft over a 10-plus year delivery window, as its existing Boeing 737-800s and 717s are gradually phased out.”

This constitutes another setback for Boeing’s 737 Max jet, which was grounded from March 2019 until November 2020 after two fatal accidents.

The Airbus deal represents the largest aircraft order in Australian aviation history, Qantas said.

Airbus recently traded at $28.98, up 1.5%, and Chicago-based Boeing at $194.62, off 0.4%. 

Morningstar analyst Burkett Huey puts fair value for Boeing at $249. On Oct. 27 he cut the target from $260 “to reflect a slower ramp-up in 737 Max production and deliveries to reflect headwinds [for the MAX] and an extension of the near-term 787 headwinds.”

Huey said, “We’re slowing down our delivery projections below Boeing’s, as the delivery pace suggests that the market can’t support the roughly 500 MAX deliveries Boeing expects.”