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Lufthansa’s new widebody order sends signals to rivals and to manufacturers

Analysis

Lufthansa's order for Airbus A350 and Boeing 777X aircraft is a reminder that it is still a major long-haul carrier and that there are two manufacturers. In Feb-2013, Lufthansa ordered 100 A320 family aircraft, signalling an eventual move to an all-Airbus short-haul fleet. Since then, its transfer of short/medium-haul non-hub traffic to Germanwings has been a major focus and rival IAG has also announced significant orders. Lufthansa has now restored its position as Europe's leading buyer of widebodies, adding to the pressure on Air France-KLM in particular.

On 19-Sep-2013, Lufthansa announced the purchase of 59 new long-haul aircraft for delivery between 2016 and 2025, consisting of 34 Boeing 777-9Xs and 25 Airbus A350-900s. It also negotiated options and purchase rights for an additional 30 of each type. The order will allow it to replace its older widebodies and to pursue modest long-haul growth from 2016. Multi-billion dollar orders are not without risk, but Lufthansa's cautious approach, together with its balance sheet and track record of cash generation, should help to secure financing.

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