Eastern Airlines signed a $778 million contract yesterday for the purchase of 23 A300B twin-engine, widebody planes produced by Airbus Industrie, a consortium of firms of five European nations.
The Wastern deal - marking the first major purchase of the European-built plane by a U.S. airline - could well be the impetus for other American carriers to purchase the highly regarded plane as well.
United Airlines is currently thinking about buying a version of the aircraft to replace some of its againg aircraft. Allegheny Airlines officials, too, said they would consider the A300 if the Eastern proposal went forward.
Under terms of the agreement, Eastern will retain, on long-term lease, the four planes it has been using essentiallywithout charge since December on a six-month evaluation arrangement. Eastern will purchase 19 more outright; three are scheduled for delivery later this year, and four will be delivered each year from 1979 through 1983.
The details of the $771 million package were presented to Eastern's lenders in a meeting in Miami yesterday. Because of Eastern's current financial commitments of almost $1 billion, the transaction is subject to the approval of Eastern's lenders. The lenders, who were described yesterday as fairly enthusiastic about the deal, are expected to give their go-ahead within 30 days.
Out of the total price, $552 million will involve external financing. Airbus Industrie has agreed to arrange for $250 million of 10-year export credit financing through European banks, guaranteed by the appropriate export credit guarantee agencies. In addition, Airbus has agreed to provide about $96 million of manufacturer's subordinated financing to Eastern.
Eastern officials said the would-be purchase price of the four leased planes - $95 million - would be put into the kitty by AIrbus, as would another $66 million in four-year senior notes.
General Electric Co., which will provide a total of 55 engines for the A300 - two on each aircraft plus nine spares - will provide approximately $45 million of manufacturer's subordinated financing.
The remaining $226 million must be generated internally bu Eastern.
"We view this airplane as an important tool in our campaign to improve the company's economic status in the years immediatley ahead," Frank Borman, Eastern's chairman and president, said yesterday when he and Bernard Lathiere, president and chief excutive officer of Airbus, announced the signing of the agreement.
Borman said the aircraft so far had exceeded expectations in reliability, passenger acceptability and economics.
He said no aircraft ever placed in service by Eastern had functioned from the outset with as few mechanical problems and other flight-delay snags as the A300.
"More importantly, the aircraft has operated at a fuel economcy 30 percent better than our fleet of smaller, three-engine jets on a seat-mile basis, and has proven to be 20 percent better in costs per aircraft mile than our large, three-engine widebody equipment," he said.
Because of the fuel efficiency of the A300, Eastern officials estimate that over the 15-year normal life span of the 23 planes it is acquiring, it will save - conservatively - more than $225 million in reduced reliance upon foreign gas purchases.
Since the Eastern deal cracks the American market for the Airbus for the first time since plane has been in scheduled service since 1974, Lathiere noted the "milestone signficance" of the agreement.
The contract also includes options on 25 of the smaller 200-seat, A300-B10 models Airbus currently has under consideration - they would not be available for four year - plus nine additional 244-seat versions of the A300. The planes Eastern has acquired have 229 seats.
The contract price for the first of the 19 aircraft delivered will be slightly more than $25 million, with each of the subsequent A300s priced in accordance with an escalation formula.
The way for the transaction was cleared last week when operators of New York's LaGuardia Airport and Airbus resolved differences over the maximum takeoff weight that could be tolerated on LaGuardia's runways that extend over water.