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No. 31

International Lease Finance Chooses Airbus

The announcement in November that Los Angeles-based International Lease Finance Corp. would order at least 30 Airbus 318 jets valued at $1.1 billion was a vote of confidence for the European airplane maker to go forward with its plans to start making the 100-seat aircraft.

It also dealt a blow to Boeing Co., which has been struggling to win orders for its own 100-seater, the 717. A bulk order from a company like ILFC can be enough to jump-start an aircraft program and influence decisions at major airlines.

And that makes the 717 vs. A-318 contest especially significant for the local economy.

The 717 will soon be the only remaining line of commercial jets assembled in Long Beach after Boeing phases out the MD-80, MD-90 and MD-11 jetliners over the next two years. To remain a viable line and offset some of the employment drops that will come from the MD-series jets being cancelled the 717 must find enough customers to necessitate production of at least 60 planes each year.

While the ILFC deal with Airbus isn’t good news for the 717, all may not be lost for Boeing. ILFC could end up buying some 717s, thereby continuing its practice of splitting orders between the two large plane makers. But some industry watchers say such a possibility is unlikely considering Boeing’s resistance to ILFC’s demands for deep price cuts.

Another favorable scenario for Boeing would be if ILFC’s deal with Airbus were to unravel. The final sale is contingent on Airbus getting enough additional orders to formally launch its A-318 program and begin production.

Jessica Toledano