September 16, 2011 / 7:13 AM / 7 years ago

Air France-KLM orders Airbus, Boeing jets worth $12 billion

PARIS (Reuters) - Air France-KLM (AIRF.PA) has split a $12 billion order for long-range jets following a year-long competition, announcing plans to buy 25 Boeing (BA.N) 787 Dreamliners and 25 Airbus EAD.PA A350s.

A 787 Dreamliner sits on the tarmac at Boeing Commercial Airplanes manufacturing facilities at Paine Field, Everett, Washington during the jetliner's certification event on August 26, 2011. REUTERS/Anthony Bolante

The move is part of a plan to renew the fleet of Europe’s largest airline and the order could rise to 110 of the next-generation aircraft including 60 more options. EADS EAD.PA unit Airbus said it expected to receive 35 of these.

Air France-KLM shares opened up more than 1 percent before slipping 0.5 percent to 6.035 euros by 4:26 a.m. ET. Shares in Airbus parent EADS EAD.PA were down 1.1 percent.

The deal follows months of politically sensitive negotiations during which the airline appeared to be pulled between pressure from French politicians to protect jobs at Toulouse-based Airbus and its own differences with Airbus over what caused the 2009 mid-Atlantic crash of an Airbus jet.

The airline believes pilots have been wrongly blamed.

Air France-KLM has said it ignored calls from French politicians to favor Airbus, but in a sign of frosty relations it snubbed the usual practice of endorsing the Airbus part of the deal in the planemaker’s press release.

Boeing is delivering its first 787 Dreamliner to Japanese airline All Nippon Airways (9202.T) next week after three years of production delays as it switched from aluminum to lightweight carbon composites. Airbus plans to deliver its similar A350 mid-decade after earlier delays in the design.

Air France-KLM said it aimed to operate 73 of the 250-300 seat aircraft through 2024, including 43 Airbus A350-900 and 30 Boeing 787-9 models.

The first Boeing 787-9 will enter into service with KLM in 2016, and the first Airbus A350-900 with Air France in 2018.

“Later, both airlines will operate both types of aircraft,” the carrier said in a statement. The airlines merged in 2004 but maintain separate networks.

Final details of the order are still being negotiated.

The firm part of the order for 50 aircraft is worth $6.7 billion to Airbus and $5.5 billion to Boeing, according to list prices. Airlines usually obtain significant discounts.

Air France-KLM indicated in June it would follow United Airlines (UAL.N) in splitting the order for the new generation of aircraft between Airbus and Boeing.

The plane order guarantees business for Britain’s Rolls-Royce (RR.L) to provide power for the A350-900, for which it makes the only engines currently on offer.

But industry sources say rival General Electric (GE.N) is front-runner to power the Boeing 787s, for which it competes with Rolls-Royce. Air France traditionally buys long-range engines from the U.S. company.

Editing by James Regan and Helen Massy-Beresford

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