November 30, 2000

Giant Jet Gets Orders It Required;

Airbus Set to Seek Approval for A3XX
By DANIEL M ICHAELS
Staff Reporter of THE W ALL STREET JOURNAL

The order Airbus Industrie has received from Australia's Qantas Airways for 12 of its
proposed A3XX superjumbo jets gives the European plane consortium enough demand to
launch the program, a senior Airbus official said.

The Qantas order brings preproduction sales for the A3XX to 44. The model would be
the world's largest passenger plane, seating 555 to 650 passengers and surpassing Boeing
Co.'s 416-seat 747-400. The pool of A3XX orders allows Airbus managers to seek
authorization to begin producing the plane, said Airbus Senior Vice President John
Leahy, who heads the group's sales operations.

Qantas Plans to "This is sufficient to go to the board," Mr. Leahy said in an

Order 31 Jetliners, interview. Airbus officials have said they could launch the
Including 12 Airbus project with between 40 and 50 orders.
A3XX Jumbos (Nov. Building the A3XX entails an investment of at least $12 billion,
29) of which Airbus already has spent roughly $1 billion on
development work. Authorization to produce the plane could
come as soon as January, Airbus Chief Executive Noel Forgeard has said. The approval
requires the assent of Airbus's board as well as the approval of its shareholders. Airbus is
owned by the French-German-Spanish European Aeronautics Defense & Space Co.,
which holds 80%, and Britain's BAE Systems PLC, which holds 20%.

Mr. Leahy said at least one more customer might order the A3XX before Airbus's board
decides on production authorization. Boeing, of Seattle, and Airbus both work to pull in
"launch customers" for their planes to ensure sufficient demand to begin production.
Airbus is still in talks with Britain's Virgin Atlantic Airways, Germany's Lufthansa AG
and, for freighter versions of the giant plane, U.S. cargo carriers FedEx Corp. and Atlas
Air Inc., according to people familiar with the talks.

Such customers normally get significant discounts from an airplane's catalog price for
their early commitments, so plane makers limit the number of launch orders. Airbus is
discounting launch orders of the A3XX by roughly 30% from the catalog price of $230
million per plane, people familiar with the deals say.

Following launch orders, Airbus and Boeing normally see a drop in demand for a new
plane until it actually flies, and Mr. Leahy said "there clearly will be a dry spell" for
A3XX orders. He said he still expects "a steady flow of orders" until the plane's test
flight, slated for 2005.
Airbus officials have said they need around 200 orders to break even on the project.
Airbus projects a market of roughly 1,500 planes in the size class above 400 seats over
the next 20 years, including freighters, and expects to win half of that.

Boeing executives say the market for 747s and larger planes is only around 1,000 units
over the next 20 years. Boeing is proposing a larger version of the jetliner, the 747X, but
so far has no takers. It had hoped to win orders from Qantas, which has been a dedicated
Boeing customer for 41 years.

Qantas did say it will buy six new increased-range versions of the 747-400, valued at
$1.2 billion based on list price. In addition to the A3XXs, Qantas will buy 13 of Airbus's
midsize A330 planes.
The total Qantas order is valued at $4.6 billion.

Write to Daniel Michaels at daniel.michaels@wsj.com