Boeing nears Thai Air order as engine standoff sinks Airbus

Thai Airways International Pcl is leaning toward awarding a winner-take-all widebody jet deal to Boeing Co. after a rival offer by Airbus SE was thwarted by a stalemate with a key partner.

Boeing is closing in on a sale of as many as 80 of its 787 Dreamliners in a mix of firm orders, options and purchase rights that could be announced within weeks, according to people briefed on the talks. The deal would add to the sales momentum for the US planemaker after it landed a $52 billion commitment from Emirates in Dubai last month. 

For Airbus, losing another large deal for its A350 jetliner would underscore the commercial cost of its increasingly strained relationship with Rolls-Royce Holdings Plc, the sole source of engines for the marquee widebody. The planemaker has seen several high-profile campaigns flip to its US competitor after Rolls-Royce drew a hard line on pricing, drawing rare public rebukes from customers like Emirates and Thai Airways.

Thai Airways Chief Executive Officer Chai Eamsiri had threatened to take his business elsewhere after Rolls balked at concessions sought by the airline. “You should never play hard to your customer,” Eamsiri said in an interview last month. “If you play hard, you may win in the short term but lose for the long term.”

The dispute also centers on a previous maintenance agreement that Thai Airways had sought to rework, said one of the people, who asked not to be identified because the discussions are confidential. The enginemaker has signaled that it won’t budge, likely dooming the Airbus deal, the people said. 

Representatives for Boeing and Rolls-Royce declined to comment. A representative for Thai Airways didn’t immediately respond to a request for comment.

Under new CEO Tufan Erginbilgic, Rolls-Royce has taken a much tougher approach to pricing, especially the service agreements where enginemakers typically earn their profits. Erginbilgic has signaled he’s prepared to miss out on some deals as he seeks to put the manufacturer on sounder financial footing.

At the Dubai Air Show last month, an expected bumper deal for the larger A350-1000 failed to materialize after Emirates President Tim Clark called the model “defective” because of engine maintenance requirements. The airline instead ordered a handful smaller A350-900s.

British Airways also opted for Boeing 787s instead of more A350s over the summer, partly because it couldn’t agree a deal with Rolls-Royce, Bloomberg News reported.

Despite public criticism by airline executives, Rolls-Royce shows no sign of abandoning its new financial discipline. The market continues to give its resounding approval, with shares more than tripling this year. 

Airbus has still won business with Rolls this year, including six A350 freighters from Cathay Pacific announced Friday. It also won an order from Air France-KLM in September for 50 A350 aircraft, and the European planemaker is close to securing a mega deal with Turkish Airlines that will include A350s.