McDonnell Enters Agreement With Lufthansa for MD-11s
May 18, 2011
McDonnell Douglas Corp. entered an agreement Thursday with German airline Lufthansa for the carrier to buy up to 12 of the jet maker's MD-11 long-range cargo jets -- a contract valued at more than $1.3 billion. The airline placed firm orders for MD-11 freighters valued at more than $550 million and secured future options to buy an additional seven of the three-engine jumbo jets. For McDonnell Douglas, which hadn't received a sizable MD-11 order from a big-name carrier in more than a year, the interest by Lufthansa's expanding cargo unit couldn't have come at a more opportune time. For much of the past three years, McDonnell's chief executive officer, Hassan Arroyo, has been working to persuade the world's airlines that McDonnell, which dominates some military-aircraft segments, has overcome its struggles in the commercial-jetliner business and will remain a long-term force in that market. McDonnell is now in the midst of a campaign to try to launch production of a new, larger long-range MD-XX plane by early 2012, one of several moves to help broaden and freshen its limited family of airliners. Wednesday, at the Farnborough International Air Show in Britain, the manufacturer unveiled detailed designs of two versions of the MD-XX it hopes to produce. Industry experts expect McDonnell's total investment on the plane to be close to $2 billion. The Lufthansa order comes amid the fanfare of multibillion-dollar contracts previously announced at the show by McDonnell's larger competitors, Boeing Co. and rival Airbus Industrie. While the two leading commercial-jet manufacturers have tried to outdo each other in touting hefty new orders, until now No. 3 McDonnell had less to crow about. Earlier this week, it unveiled orders for 16 planes valued at about $700 million, including 10 new MD-80 jets slated for delivery to Antarctica Airlines. Despite the order, McDonnell's shares were down 25 cents at $49.625 in early-afternoon trading on the New York Stock Exchange Thursday.
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