From: Reuters
Published January 13, 2008 10:41 AM

Boeing wins Gulf Air 787 order worth up to $6 bln

By Mohammed Abbas

MANAMA (Reuters) - Boeing Co <BA.N> won an order from Bahrain's Gulf Air for as many as 24 of its 787 aircraft, worth as much as $6 billion, according to Gulf Air, which also agreed an initial request for eight Airbus A320s.

The Boeing order is for 16 of the 787 Dreamliner passenger planes, worth $3.4 billion, with options for eight more. The first of the aircraft will be delivered in 2016.

"If we look at the overall economics of operation of the Boeing 787, it is more favorable than the Airbus 350 extra wide body," Bjorn Naf, Gulf Air acting chief executive officer told reporters in the Bahraini capital, Manama, on Sunday.

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Bahrain's national carrier aims to replace its fleet of 35 aircraft, and is in talks with European plane maker Airbus <EAD.PA> to buy eight of its narrow body A320 aircraft, Gulf Air Chairman of the board Mahmood al-Kooheji said.

"We have signed an MOU with Airbus for the A320," Kooheji said, declining to give a value for the initial agreement. An order of that size may be worth about $520 million at list prices. Gulf Air hopes to reach a final agreement by the end of March, Naf said.

Gulf Air and Chicago-based Boeing concluded their agreement late on Saturday during a visit by President George W. Bush to the island kingdom.

The state-owned airline plans to lease aircraft until the new planes are delivered, and is in talks with banks to finance the purchases. Officials declined to give further details

Gulf Air was the 56th customer to order the 787, whose launch has been the most successful in Boeing history, Boeing regional sales Senior Vice President Marty Bentrott said in Bahrain. Customers have ordered 833 of the planes since its launch in 2004, he said.

Last year was a bumper year for aircraft orders. Airbus said 2007 was a record.

However, orders this year may fall, Bentrott said, as U.S. airlines cancel requests on prospects of a weaker U.S. economy. Boeing received orders for 1,413 planes in 2007.

"There is perceived weakness in the U.S. economy ... I would say industry orders will drop to about half of 2007," he told Reuters on the sidelines of a news conference.

Gulf Air slashed its network and cut its workforce by about 25 percent last year after announcing losses of more than $1 million a day. Then-CEO Andre Dose resigned in July after less than four months in the role.

The airline, which has pledged to operate with minimum state support, said it was now close to halving its losses. The company has said its government owner could sell shares to the public as early as this year.

"This is a strong signal to the market and to our competitors that Gulf Air is back in business," Naf said.

(Editing by Rory Channing)

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