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Cablegate: Aer Lingus Decides Against Boeing for New

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RR RUEHWEB

DE RUEHDL #0391 1371611
ZNR UUUUU ZZH
R 171611Z MAY 07
FM AMEMBASSY DUBLIN
TO RUEHC/SECSTATE WASHDC 8265
INFO RUEHRL/AMEMBASSY BERLIN 0126
RUEHLO/AMEMBASSY LONDON 2313
RUEHFR/AMEMBASSY PARIS 0260
RUEHBS/USEU BRUSSELS

UNCLAS DUBLIN 000391

SIPDIS

SIPDIS

USDOC FOR MAC/OEURA/CPD/RMCLAUGHLIN

E.O. 12958: N/A
TAGS: ECON EAIR ETRD PREL EI
SUBJECT: AER LINGUS DECIDES AGAINST BOEING FOR NEW
LONG-HAUL AIRCRAFT


1. On May 16, Aer Lingus CEO Dermot Mannion told the
Ambassador that the carrier had effectively decided against
Boeing for a planned purchase of 8-12 long-haul planes, which
could have netted the U.S. manufacturer roughly USD one
billion. Mannion noted that he had ended talks with Boeing
on May 6, having been unable to come to terms on pricing for
the 787 Dreamliner and on a delivery package for interim
aircraft pending the 787s' projected 2012 delivery. Aer
Lingus, he added, had accepted Boeing's decision to set a
late April/early May deadline for a purchase decision, given
the queue of carriers that wished to place 787 orders.
(Note: A Boeing sale had been the Embassy's highest
commercial advocacy priority over the past year.)

2. Mannion pointed out that Aer Lingus had not yet completed
a deal with Airbus for A350 aircraft. He noted that interim
deliveries of A330s would feature centrally in an agreed
package (with Aer Lingus having leased two A330s this year in
anticipation of new U.S. market opportunities with U.S.-EU
Open Skies). Mannion cited speculation that the dollar's
recent weakening might help to close the 15 percent price
differential between the 787 and A350, but he explained that
Airbus aircraft were also priced in dollars. When the
Ambassador asked whether theoretical difficulties in closing
a deal for A350s might lead Aer Lingus to reconsider the 787
option, Mannion said that he could not envision reopening
talks with Boeing.

3. Mannion expressed confidence that Airbus would build the
newer version of the A350, despite doubts expressed by some
aviation industry watchers. In any case, Aer Lingus planned
to add provisions to a sales agreement to protect against the
possibility of Airbus delaying or discontinuing the
aircraft's development. He said that there were orders for
roughly 100 A350s from 10 customers who had stayed with
Airbus from the old A350 program. There were also memoranda
of understanding with 3 or 4 carriers for 60-70 A350s, as
well as 2-3 new contracts pending with customers who had not
been part of the old A350 program. Mannion expected that,
once the program for the A380 picked up steam and generated
revenues, Airbus would be in a position to accelerate
development of the new A350.
FOLEY

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