Air France-KLM unveils a small A220 in the shadow of the superjumbo

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PARIS, September 29 (Reuters) – Air France took delivery of its first compact Airbus A220 airliner on Tuesday, committing to greater comfort and reduced emissions on short journeys as its Franco-Dutch parent company pursues a reshuffle larger fleet to rationalize costs.

The French airline, which is part of the Franco-Dutch group Air France-KLM (AIRF.PA), said the 148-seat jet designed in Canada would reduce fuel consumption and emissions by 20% after entering service European with a flight to Berlin on October 31.

Air France ordered 60 aircraft in 2019, with options for at least 30 more, to replace the smaller members of Airbus’ single-aisle portfolio, the A318 and A319.

The unveiling illustrated a shift in emphasis from the world’s largest jets to some of the smaller ones, as airlines highlight the lower costs and environmental benefits of the new lightweight models.

The audience of 300 guests including politicians gathered in a hangar originally built for the Airbus A380 superjumbo, once the flagship of Air France and other major long-haul carriers but whose retirement has been accelerated by the coronavirus crisis.

To recall the sawtooth strategies of the $ 150 billion jet industry, a disused A380 was left ignored on the tarmac outside.

The A220 was developed by the Canadian Bombardier (BBDb.TO), but its ambitions collapsed in the face of the lack of cash needed to unlock the stranglehold of Airbus and its American rival Boeing (BA.N). Airbus took over the A220 program for a symbolic dollar in 2018.

Today, Air France-KLM is pitting the two aircraft manufacturing giants against each other for the next step in a comprehensive fleet review under the leadership of Chief Executive Officer Ben Smith, a former Air executive. Canada which is committed to simplifying a fragmented fleet to reduce unit costs.

He said the group would decide in a few months on a new order for at least 80 medium-haul jets in a busier category just above the A220, in what would be its biggest fleet transaction ever. .

This follows a call for tenders earlier this year to renew and expand KLM’s medium-haul Boeing 737 fleets as well as the French and Dutch operations of economy brand Transavia.

SHIFT RENEWAL OF THE FLEET

Smith said the deal could involve a firm purchase of 80 planes with options for 60 to 80 more. Such a deal would be worth more than $ 8 billion at list price before discounts which, according to aircraft traders, can easily exceed 50% for large quantities.

Some analysts have suggested that Boeing (BA.N) will lose competition after a long association with KLM, but Smith said the group was in talks with Boeing and Airbus.

The widely observed competition is between the medium-range A320neo and A321neo jets on the Airbus side and the competing 737 MAX family from Boeing. It operates in a context of resurgent demand from European airlines, mainly in debt, for an ability to reduce costs and respond to growing environmental pressure.

Beyond that, the overhaul of the group’s fleet will see separate competitions around 2023 to replace the old A320 / A321 models and the long-haul A330 model: both on the Air France network.

For the future competition to replace the A320 workhorse, Air France would be interested in a longer version of the often-mentioned A220 if Airbus launched one, Smith said.

Airbus commercial director Christian Scherer told Reuters that the aircraft manufacturer was considering the idea with a “positive attitude”, but that no decision was currently on the agenda.

Industry sources say its immediate priority is to reduce the costs of the loss-making A220 by pressuring suppliers to offer deeper price cuts and redesigning parts to be built in. lower cost.

Reporting by Tim Hepher; Editing by David Clarke and Jonathan Oatis

Our Standards: Thomson Reuters Trust Principles.

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