Boeing's Iraq Deal a No-Bid Win
CHARLOTTE, N.C. -- When the Iraqi government decided to spend a few billion dollars to buy jet aircraft to re-establish commercial aviation in their country, it didn't waste time talking with multiple bidders.
In fact, before placing a 30-plane order for the 737-800 from Boeing (BA - Cramer's Take - Stockpickr), the Iraqis did not solicit a bid from France-based Airbus, the world's only other big jet manufacturer. The order, which was announced Monday and represents a total list price of $2.2 billion, also included options for 20 additional jets.
Airbus was not offered a request for proposal (RFP) by the Iraqis, said Airbus spokesman Clay McConnell.
"We have had contact in recent years with Iraqi Airlines, but Airbus was not given an RFP and did not have the opportunity to compete for this contract," McConnell told TheStreet.com.
Said Boeing spokesman Peter Conte: "It is not uncommon for Boeing or for our competition to win no-bid contracts from certain customers."
Assisted Reconstruction
He added that Iraq's commercial airline -- called Iraqi Airways before the war, and Air Iraq afterwards -- is primarily a Boeing operator. "The individuals in Iraq who are involved in commercial airplane operations have a great familiarity with the Boeing product," he said.
Besides its order for 30 aircraft, the Iraqi government contracted options for 10 additional 737s, with a list price of about $75 million each, and the two parties are finalizing an agreement for 10 Boeing 787s, with a list price of $146 million to $200 million each. Typically, aircraft buyers do not pay list price, given the intense competition between Airbus and Boeing.
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