LONDON – British Airways parent IAG said on Thursday it would place a big order for Boeing’s 777-9 jetliner, ending a two-year sales drought for the new long-haul plane.
International Consolidated Airlines Group, as IAG is formally known, said it would place a firm order for 18 Boeing 777-9s and take options for up to 24 more.
The deal has a combined value of $18.5 billion at list price before industry standard discounts.
The jetliners will eventually replace BA’s aging 747 jumbo jets in another sign twin-engine long-range planes are supplanting their four-engine rivals.
The 777X, when it flies later this year, will become the world’s largest twin-engine airliner.
Boeing rival Airbus SE this month threw in the towel on the four-engine A380 superjumbo because of a lack of demand.
It will stop building the plane that never turned a profit in 2021. Boeing also is building only about six 747s a year because airlines aren’t ordering the plane that first flew 50 years ago.
IAG Chief Executive Willie Walsh called the 777-9 “the ideal replacement for the Boeing 747.”
BA also will phase out some of its 777-200s. Deliveries are due between 2022 and 2025.
Though the 777X can seat more than 400 passengers, BA says it will equip them with 325 seats.
The 777X, which includes the 777-9 and smaller 777-8, was launched six years ago with a raft of orders, but it too has suffered an order lull.
Singapore Airlines was the last carrier to buy the plane when it ordered 20 two years ago.
Boeing Chief Financial Officer Greg Smith this month said winning more 777X deals would be a priority this year.
Boeing in the coming weeks plans to formally unveil the first plane that is due to enter service in 2020. The plane is powered by General Electric Co. engines.
The order is a blow to Airbus and Rolls-Royce Holdings PLC.
Walsh last year expressed frustration with the aircraft and engine makers because of delivery and reliability problems on different aircraft and signaled he could take his business elsewhere.
Rolls-Royce Thursday said full-year 2018 profits were negatively impacted by GBP790 million ($1.1 billion) because of engine-related problems. The company also took a GBP186 million earnings hit linked to Airbus’s decision to shutter the A380 product.
Walsh said Airbus and Rolls-Royce would have the opportunity to compete on future plane orders. BA will need to replace 42 additional 777-200s giving plane and engine makers opportunities to compete.
Boeing says it has now secured 358 orders and commitments for the 777X.
IAG announced the deal in conjunction with full-year results that saw operating profit, its most closely watched earnings measure, advance 38.2 percent to €3.68 billion ($4.19 billion)
Rolls-Royce also said it would withdraw from a competition to power a new plane Boeing may build. The timelines to complete development of its engine and Boeing’s plans to introduce the so-called New Midsize Airplane around 2025 don’t match up, Rolls-Royce Chief Executive Warren East said Thursday, calling the move “a very difficult decision.”