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The Week Of:
October18,1999

Frontier to Buy 20 Airbus Aircraft

In the second Airbus victory over Boeing last week on the commercial aircraft front, Frontier Airlines will buy 20 new Airbus narrowbodies, the company announced late on Friday.

The Denver-based low-fare airline plans to buy a mix of 11 Airbus A318 and A319 jets, plus place options for another 9 new aircraft. Terms were not disclosed in the deal, which is still in the LOI stage, but it is estimated to be worth more than $1 billion.

Boeing chairman Phil Condit last week said the company lost the order because it couldn't match Airbus's prices, implying that a deal with Frontier would have been a money-losing prospect. Boeing has committed to completing only profitable commercial aircraft sales going forward and not to sacrifice profitability for marketshare. Condit had revealed the Airbus coup before the European consortium or Frontier had announced the order.

Frontier plans to use the new aircraft to replace its fleet of 19 late model Boeing 737s beginning in 2001. The company also plans to lease additional Airbus aircraft that will be used as growth aircraft over a 10-year period.

Frontier reported its first profitable quarter last year after facing intense competition from United Airlines at its Denver hub. Frontier chairman Sam Addoms says it is more economical now to own its fleet rather than lease the aircraft.

Frontier has been in negotiations with both Airbus and Boeing for fleet replacement for more than six months.

"We believe that choosing Airbus will provide a superior product for our customers, long-term stability for our employees and a better rate of return for our shareholders," Addoms said.

Frontier vice president of marketing Jeff Potter said that from a marketing perspective, the Airbus product offers enhancements over the 737s, such as wider seats and a wider aisle.

The A319s will be equipped with International Aero Engines V2500s, while the A318s will be powered by Pratt & Whitney PW6000s.



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