JetBlue Got Discount of Up to 72% on Airbus A220s, Moody's Says

(Bloomberg) -- JetBlue Airways Corp. got a great deal on its latest aircraft purchase from Airbus SE, according to Moody’s Investors Service.

The carrier will probably pay $1.4 billion to $1.7 billion for 60 Airbus A220-300 jets, or between $23 million and $28 million per plane, Moody’s analyst Jonathan Root said in a report Friday, citing estimates by appraisers and price breaks that are typical for large orders. That’s a discount of as much as 72 percent from the deal’s list value, he said.

“As with most campaigns, we believe the decision comes down to the lowest all-in cost, because the narrow-body aircraft manufactured by Airbus and Boeing have similar capabilities and operating costs for the majority of operators,” he said.

The purchase, announced July 10, was the first since Airbus took control of Bombardier Inc.’s C series program and renamed the aircraft the A220. While significant discounts are typical for aircraft purchases, pricing details are closely guarded.

JetBlue declined today to comment on any terms of the deal. Airbus doesn’t comment on confidential discussions with customers, a company spokesman said.

Last year, before Airbus took over the program, Boeing Co. filed a trade complaint against Bombardier, alleging that the Canadian planemaker had sold the aircraft to Delta Air Lines Inc. at “absurdly low” prices. While the Commerce Department initially decided to impose duties of almost 300 percent on the plane, a U.S. trade panel blocked the tariffs.

For Airbus, quickly building an order book for the A220 is a crucial challenge as the Toulouse, France-based company seeks to lower costs. To make the aircraft viable, the planemaker says it needs a “double-digit” reduction in costs in its supply chain and is in the process of negotiating with suppliers.

--With assistance from Benjamin Katz.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Susan Warren

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