Gordon Werner

Wednesday May 29, 7:03 pm Eastern Time

Reuters Company News
KLM says will not buy A380 superjumbo jet

By Chris Stetkiewicz

SEATTLE, May 29 (Reuters) - KLM Royal Dutch Airlines NV said on Wednesday it would not order Airbus SAS' massive 555-seat A380 airliner, preferring jets half that size and possibly a faster new jet proposed by Boeing Co.

Noting several carriers on popular routes could make good use of the A380, slated to enter service in 2006, executives of the No. 4 European airline told reporters they could not afford to gamble on an investment in such a huge airplane.

"I'm convinced that there are airlines that are flying fairly thick routes over the Pacific, maybe one or two over the North Atlantic, that can afford the A380. But for KLM, absolutely no," said Peter Hartman, the airline's Chief Operations Officer.

On a trip to Seattle to finalize details of a recent order for 13 Boeing wide-body jets, Hartman cited the carrier's 68-year relationship with Boeing as a factor in its decision, though it also plans to order Airbus A330-200 wide-bodies.

KLM will take eight 300-seat Boeing 777-200ERs (extended range), including four on leases, plus two more in a sale and lease-back deal. The carrier also ordered three 747-400 extended range freighters.

With those jets, KLM will begin replacing 10 aging 747-300s and expects to phase out 10 Boeing MD-11s and 12 Boeing 767s with a mix of 777s and 250-seat A330s, Hartman said.

THE VALUE OF A RELATIONSHIP

In March KLM officials noted aircraft can be had cheaply following the Sept. 11 attacks and a sharp drop in airline traffic and jet orders. But Hartman said KLM chose the 777 over Airbus' A340-300 even though it cost more.

"We have a very long-lasting relation with Boeing. That means that even under these circumstances, you are still partners and still have respect for each other," Hartman said. KLM is never trying to get the lowest price, what we want to have is the best value for money."

With the 777-200ER, KLM can carry more payload or fly further than with the A340-300, Hartman said, adding that the twin-engine 777 can climb faster than the four-engine A340, which can cut flight times and crew costs.

Hartman noted flights could be shortened even further, perhaps by two hours on an Amsterdam-Tokyo route, with Boeing's proposed 250-seat "Sonic Cruiser." If Boeing delivers on its speed and fuel burn projections, KLM would buy the jet.

"Based on what I foresee now, 15, maybe more," Hartman said. But he stressed KLM would not be among the "launch" customers who get big discounts for taking the jet when it first rolls off the line, tentatively slated for 2008.

"There's no necessity," Hartman said. "Knowing our size and place, we try all the time to be a smart follower, because we can't afford big mistakes."

New airplane models often get updated soon after entering service as flight data allow technical improvements. By waiting until after the Sonic Cruiser launch, KLM could get a better plane, Hartman said.

A380 SLOWS 747 SALES

Similarly, many airline customers may wait to see how the A380 performs before joining the seven airlines which have already ordered 85 of the double-decker giants. The A380 launch has also postponed potential 747 orders, KLM said.

"It (747 sales) depends how successful the A380 will be," said Jan Witsenboer, KLM Chief Purchasing Officer. "I imagine some airlines are waiting to see if (the A380) becomes a successful concept."

Like the 777 and A330, the Sonic Cruiser would allow KLM to run more direct flights and bypass "hub" airports, which can efficiently corral massive passenger flows, but delay travelers en route to smaller cities.

So instead of flying 400 or 500 passengers from Amsterdam to Singapore and then Jakarta, KLM can fly 250 to 300 people to each city on separate flights.

"That's what the customer wants --more frequencies," he added.

KLM remains committed to Boeing's narrow-body 737 jetliner, but Hartman said as the airline combines and standardizes its two low-fare subsidiaries, buzz and Basiq, it could swap their 16 current 737s and BAe146 aircraft for Airbus A320s.

Airbus is owned by European Aeronautic Defence and Space Co. (EADS), which holds an 80 percent stake, and Britain's BAE Systems Plc.

TOO MANY AIRLINES?

KLM expects European airline consolidation, beginning with alliances among major carriers like British Airways Plc, Deutsche Lufthansa AG and Air France and perhaps mergers several years down the road.

Overcapacity, partly a result of preserving inefficient national carriers, and aggressive price discounting have hampered airline profitability, Hartman said.

"We are absolutely opposing this philosophy," Hartman said. "We (airlines) are making a mistake by bringing in too much capacity after we have cut prices."

Chansen

I can see how Amsterdam could accommodate such a large plane but have flown KLM I can see the direction they are going.

Wingman

I believe that KLM has made a wise decision in rejecting the acquisition of the A380.

KLM knows its place in the airline industry and proceeds with caution, which is what more carriers should be doing.

Spider-man

KLM has definately made the right choice. Though I would love to see a KLM A380. It would be a real beauty.

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hernan

What? No KLM 'Flying Salamis'?

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continental sat

Good to hear I guess KLM is a true friend too boeing

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Chansen

orders!

Darryl

I have submitted it before and I will submit it again - Boeing is value for the money, not just a cheap acquisition cost item like an Airbus. KLM realizes this, and my point of view has nothing to do with being one of the so-called "pro American" folks like the Airbus lovers try to label us. It is quality of product, plain and simple. Until something better comes along, I will continue to hold this pointy of view, too.

Note: The Bae-146 was a kickbutt airplane, so Europe can make a good one when they want to.

NEADC9

Wise Choice. I see the 380 as being valuable for only a few airlines and only on a few routes. Nothing against KLM, but I never thought they fit that category.

Although, I can't wait to see a 380 actually fly, I'm not a fan of it!

Give me a 747-400 anyday!

Chansen

I have flying on a KLM MD-11. KLM uses that widebody type to fly many routes to Africa so besides routes such as those Seeing how the A380 would become a plane of inconvenience to the Airline and its passengers. According to what we have seen on the Sonic Cruiser that it would fit the fleet justifications of KLM, I think. If the Airline was to go for such a plane, seeing only two but with none and going with a different idea it seem more justified for KLM. The Airport for which I picked was probably a bad choice but I was going on for what I saw.

Romania is #1

To bad the MD-11's have to go.

smoothjazz

This is a great news! I would love to see KLM livery on B777s.
It's kind of surprising that KLM decided to buy some A330s, but
I think KLM A330s will look nice too...

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Delta767

That´s good news. I still dont like the A-380.

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Pete Hamel

That will save KLM a lot on blue paint.

I am also happy that they decided against the A380. I like the looks of 747s in KLM's colors. The 777 will look nice too.

As for the A380, I can see the big Asian carriers wanting it, since they have high density flights across the Pacific. They are all going to and from big airports, I would guess anyway, and the A380 would be a good choice for them. Not that I would want any of them to stop flying their 747s and 777s.

Pete