Virgin, Cathay to buy 555-seater Airbus A3XX

"Virgin is already a long-standing customer of Airbus. We have said previously said we are in discussions with Airbus about the A3XX jetliner," a spokesman for Virgin Atlantic said. The London-based carrier declined to comment any further.

Lavina Chan, a spokeswoman for Cathay Pacific in Hong Kong, said the airline has a close interest in the Airbus A3XX but "has not yet pinned down a deal." "It’s no secret that we are interested and we won’t rule out buying the A3XX in the future," Ms. Chan said.

John Leahy, senior vice president of the commercial division at Airbus, said at a Sydney media briefing Friday that commitments from about five carriers will be needed to help justify the launch of the aircraft.

Airbus, based in Toulouse, France, already has received expressions of interest in the A3XX from Emirates Airlines and Singapore Airlines, which recently paid 600.25 million pounds ($894.37 million) for a 49% stake in Virgin Atlantic. Earlier this week Air France also said it is considering the purchase of up to ten of the jumbo planes.

"Emirates and Singapore Airlines would like to see the aircraft in their fleets, Air France wants at least ten, and others will be announcing their intentions over the next two weeks," Leahy said. Other carriers in talks with Airbus include Australia’s Qantas Airways, and Malaysian Airline System Bhd.

A A3XX will cost about $216 million to $230 million, with features including bars, casinos, and coffee lounges. Leahy said Airbus will meet with its supervisory board next week to clear the commercial launch of the plane later 2000. Airbus is 80%-owned by European Aeronautic, Defense & Space Co. and 20%-owned by BAE Systems PLC.

Separately, Virgin Express Holdings PLC has placed orders for 11 of Boeing’s 737-700s, with a total value of $440 million. In a press release Friday, Virgin Express said it agreed to lease eight aircraft for eight years from GE Capital Aviation Services, a unit of General Electric Co.’s GE Capital. The aircraft are scheduled to be delivered between July 2001 and April 2003, with one delivered in 2001, four in 2002 and three in 2003.

Virgin Express will lease another three 737-700s for eight years from International Lease Finance Corp., a unit of American International Group Inc. Two of those planes will be delivered in 2002 and one in 2003. The aircraft will be powered by CFM56-7B engines, made by CFM International, a joint venture of General Electric Co. of the U.S. and Snecma of France.

Virgin Express’s current fleet consists of 23 Boeing 737s, 13 of which are 737-300s and 10 are 737-400s. The average age of those planes is seven and a half years, Virgin Express said.

British Airways in merger talks with KLM

LONDON, June 4: British Airways Plc has begun takeover talks with KLM Royal Dutch Airlines, reports the Sunday Business newspaper in the UK.

Citing BA executives, the newspaper said the company plans to take a majority stake in KLM.

The bid has been subject to weeks of rumour after a merger between KLM and Alitalia collapsed earlier this year. Merger negotiations between BA and KLM failed in 1992.

A merged BA and KLM would create a powerful grouping with a tight hold on North Atlantic business routes. American Airlines, owned by AMR Corp, and part of BA’s One World alliance, started a surprise bid for KLM’s alliance partner, US-based North West Airlines. KLM’s share price rose on Friday on news of the American Airlines bid.

Industry analysts say such a merger would be possible — bankers value KLM at about $900 million. However, they caution that such a merger would face large obstacles in the shape of international treaties governing air traffic.