US embassy cable - 02AMMAN5412

UNCLAS AMMAN 005412 
 
SIPDIS 
 
SENSITIVE 
 
USDOC FOR ADVOCACY CENTER -- CHRIS JAMES 
USDOC FOR 4520/ITA/MAC/ONE/PTHANOS 
PASS EXIMBANK 
 
E.O. 12958: N/A 
TAGS: BEXP, EFIN, EAIR, JO 
SUBJECT: BOEING PRESENTS "AGGRESSIVE" FINAL OFFER TO ROYAL 
JORDANIAN 
 
 
1.  (SBU) Summary.  The Boeing Company, which has been in 
negotiations with Jordanian national carrier Royal Jordanian 
Airlines (RJ) for the purchase and leasing short-haul aircaft 
in competition with Airbus, presented its final offer to the 
airline September 19.  The offer marks the climactic stage 
after over a year of negotiations.  Boeing officials were 
cautiously optimistic, but concerned that Airbus may yet 
attempt to undercut the deal.  End Summary. 
 
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IT'S NOT OVER TILL IT'S OVER 
--------------------------- 
 
2.  (SBU) Boeing's negotiating team of Samir Hanna, Senior 
Sales Manager, Edward Schachle, Regional Director, and Peter 
Ledger, local Boeing representative presented what it termed 
its final offer to RJ CEO Samer Majali September 19.  The 
deal features the sale of five 737s and the leasing of 
another four of the aircraft.  Airbus, which recently leased 
four A-340s to RJ, is also in negotiation to sell a like 
number of A-320s. 
 
3.  (SBU) Characterizing the offer as "very aggressive", 
Boeing officials filled us in on the details September 19. 
The offer includes a discount of 39.9% off the "sticker" 
price, an advance payment schedule beginning at 20%, rather 
than the usual 30%, $10 million to top off the resale price 
of RJ's existing A-320s, a spare parts exchange program worth 
$3.2 million, and another $3.4 million in training support, 
manuals, and manual revisions.  All this in addition to the 
performance features of the 737 which make it "clearly 
superior" to the A-320. 
 
4.  (SBU) Expecting the RJ CEO to be a bit more enthusiastic 
upon receipt of the Boeing proposal, Hanna said "Majali was 
not displeased".  He said the substance of the Boeing message 
was that the company was doing "everything it can" to work 
with RJ, and that this was the best deal they could offer. 
He stressed the company would not get into a price war with 
Airbus.  Hanna said that the concessions they were making 
were "extremely special", on terms they generally do not 
offer to customers who buy 30 planes. 
 
5.  (SBU) Hanna said that both offers would now be considered 
by the RJ board, expected to meet sometime between now and 
the end of the month.  Majali told the team a decision would 
be made the first week of October.  He suggested there might 
be another round of negotiations, saying that it's "not over 
till it's over".  Despite this, Hanna reiterated that this 
was their best offer.  Hanna added that he thought Airbus 
would be very surprised at the aggressiveness of the Boeing 
deal. 
 
-------------------------------- 
FINANCING COULD BE A DEAL BREAKER 
--------------------------------- 
 
6.  (SBU) Hanna said EXIM assistance could help nail down the 
deal.  He said he suspected that Majali had already "got 
something from the French" on the financing side to help fund 
the purchase, and was seeking something similar from Boeing. 
He said that both the airline and the Jordanian government 
were adamant about not providing sovereign guarantees given 
RJ's status as a self-sustaining "corporatized" entity that 
is seeking a foreign investor partner. 
GNEHM