Korea Air Lines Co. has divested Boeing Co. — typically the airline’s main plane supplier — to order 33 Airbus SE A350 wide-body jets in a $14 billion deal as it seeks to streamline its fleet ahead of a merger with Asiana Airlines Inc.
The order will see the Seoul-based airline buy 27 of Airbus’ largest twin-aisle jets, the A350-1000, and six smaller A350-900s, which it selected over Boeing’s yet-to-be-certified 777X. Bloomberg News previously reported that Korea Air was on track to announce a significant deal as early as this week for at least 20 A350 jets.
“The acquisition of the next-generation, eco-friendly A350 is not only in line with the airline’s sustainability efforts, but is also seen as a preparation for the integration of Asiana Airlines,” Korea Air said in a statement on Thursday . The 18.5 trillion won ($14 billion) deal is before customary discounts.
Demand for larger jets, bullish bets on travel growth and tensions over planemakers’ ability to meet demand for single-aisle planes this decade are fueling a surge in wide-body orders. Korea Air is also looking to simplify its fleet and reduce costs ahead of its merger with smaller rival Asiana. The deal only needs regulatory approval in the United States.
Airbus also scored another win Thursday with Japan Airlines Co. buying 42 jets, choosing 21 A350-900s and 11 A321neos, while Boeing landed a consolation order of 10 787-9s.
The merger with Asiana is set to bring Korea Air a significant number of modern and sought-after Airbus jets. The airline doesn’t operate the A350 but Asiana does, with 15 in its fleet and another 15 on order. Both carriers fly nine relatively new A321neos each and have a combined backlog of 57 of Airbus’ largest narrow-body jets. Bloomberg previously reported that Korea Air was interested in adding more A321neos.
Korea Air had nearly 160 planes as of Dec. 31, according to its most recent financial statement, and about 100 on backorder. The airline is also considering retiring its fleet of 10 Airbus A220s, its smallest jet, Bloomberg reported last month.
The order represents a boost for Airbus as its A350-1000 jet acquires its 10th new operator in 12 months, including Delta Air Lines Inc., which has a 14.9% stake in Korea Air’s parent company, Hanjin KAL Corp. The series of deals helps counter the loss of some wide-body campaigns due to engine maker Rolls-Royce Holdings Plc’s stance on tougher pricing.
Meanwhile, rival Boeing is facing increasing scrutiny over the safety of its jets following several recent crashes.