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Home / Business / Spirit Airlines is close to agreeing major Airbus orders: sources

Spirit Airlines is close to agreeing major Airbus orders: sources



(Reuters) – US budget company Spirit Airlines ( SAVE.N ) is close to agreeing on a preliminary agreement to book as many as 100 single-entry flights worth up to $ 12 billion to more recent catalog prices from Airbus ( AIR.PA ), industry sources said.

FILE PHOTO: A Spirit Airlines low cost logo is pictured on an Airbus flight in Colomiers near Toulouse, France, November 6, 2018. REUTERS / Regis Duvignau

Such an agreement would be the first for the European planner since the United States set 10% tariffs on some of the planes they offer to US carriers last week, part of a protracted transatlantic trade dispute over airline subsidies.

Airbus declined to comment. Spirit, which reports earnings on Wednesday, did not respond to a request for comment.

A deal of that size will be worth up to $ 12 billion at the latest prices on Airbus listings in 2018, but industry sources say such deals usually involve discounts of at least 50%.

In August, Miramar, Florida-based airline said it looked at both Airbus A321neo jets or a Boeing ( BA.N ) alternative to provide growth.

Spirit, founded in 1993, currently operates an all-Airbus fleet of 140 jets.

The low cost airline relies on "separating" prices, offering a basic service at an attractive price filled with a range of optional extra costs.

An agreement for Boeing to break into Spirit would be seen as a breakthrough since low-cost airlines typically only use one model to save money on costs such as training. But if the agreement is confirmed, Airbus can paint it as a moral boost amid the new tariffs.

"It shows that customs are not working," said a European source.

Boeing has said the tariffs are needed to offset what it considers an unfair advantage to Airbus because of subsidies. Both planners have partially lost funding decisions, and the EU is expected to respond with its own tariffs next year.

Aircraft are usually booked several years in advance, which means that all aircraft booked now would only be covered by tariffs in the event of an extended transatlantic tariff war. Airbus jets collected at a plant in Alabama are not yet included.

It was not immediately clear whether a Spirit order would include any agreement to offset the cost of tariffs.

Spirit Chief Executive Ted Christie told a conference in August that the airline saw the benefits of continuing to operate a single fleet, but that it would carefully study the prices of any flight offer.

Reporting by Tim Hepher, Tracy Rucinski; edited by David Evans and Kirsten Donovan

Our Standards: Thomson Reuters Trust Principles.

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