Lufthansa favors purchasing Boeing, Airbus in a major deal

Deutsche Lufthansa signaled a major aircraft order to drive down fuel costs on long routes, saying its board had backed modernization plans that industry watchers expect to benefit both Airbus and Boeing Co.

Germanys top carrier gave few details after Wednesdays board decision, but people familiar with the matter said the deal could include $14-15 billion of firm orders split between the two top jet makers, including the first order for a revamped Boeing 777.

Although being in the middle of a deep restructuring that includes 3,500 job cuts, Lufthansa is investing in modern jets to cut its fuel bill and catch up with Middle East rivals particularly on highly fought-over routes between Europe and Asia.

Lufthansa looks set to order up to 34 of the 406-seat 777-9X including firm orders for 20, two people familiar with the matter said. This is subject to Boeings formal decision to build the plane, which its board is expected to approve by year-end followed by entry into service around the end of the decade.

Lufthansa also plans to purchase 20-25 Airbus A350-900 jets, the European manufacturers latest model due to enter service in the second half of 2014, people familiar with the matter said for Reuters.

The expected order is a boost for engine manufacturers Rolls-Royce and General Electric, which power the A350 and the latest versions of the 777, respectively.

Lufthansa has a mixed fleet dominated by Airbus and Boeing jets. Its core German brand does not yet fly passenger 777s.

Besides voting on the fleet plans, Wednesdays supervisory board meeting was expected to discuss potential candidates to succeed 53-year-old CEO Franz, whose surprise departure comes at a critical juncture of the groups restructuring program. Under Franz, Lufthansa has pushed through a cost-cutting program now in its second year to boost operating profit to 2.3 billion euros in 2015 from 524 million euros in 2011, and partly fund investments in modern planes and new cabin products.

Lufthansa shares rose 0.5% in Germany while being ahead almost 30% for 1 year period. Boeing advanced 1.1%. The current consensus for the aircraft maker stock among 26 polled investment analysts is to buy stock in Boeing Co. European Aeronautic Defense and Space Company which produces Airbus also added 3%.