NEW AIR ALGERIE LEADERSHIP READY FOR BOEING

UNCLAS ALGIERS 000319 SIPDIS SIPDIS STATE FOR EB/TRA - JBYERLY, JREIFMAN DEPT OF TRANSPORTATION FOR SEHATLEY E.O. 12958: N/A TAGS: EAIR BEXP AG SUBJECT: NEW AIR ALGERIE LEADERSHIP READY FOR BOEING COURTSHIP REF: A. 07 ALGIERS 1772 ¶B. 07 ALGIERS 946 ¶1. (U) In a March 15 meeting with the Ambassador, new Air Algerie President Abdelwahid Bouabdallah and his assistant Amar Mahiout told us they intended to move quickly to replace part of Air Algerie's mid-range Boeing 737 fleet (ref A). Bouabdallah said that they would be looking for delivery of ten new 100-150 seat jets in 2009, of which two would be cargo planes. The officials told us that they have heard nothing from Boeing since Bouabdallah's arrival on the job last month. Meanwhile, Airbus has been aggressively courting their business, including phone calls from the Airbus president and offers to slash aircraft prices. Because Air Algerie already has Boeing simulators and maintenance experience, Bouabdallah said the company was inclined to purchase from Boeing, but needed guidance on which specific type of aircraft and specifications would best suit Air Algerie's needs. Bouabdallah said they wanted a broad contract with Boeing, to include consulting and maintenance support. ¶2. (U) Given the decline of the dollar, Bouabdallah said that buying from Boeing remained a more attractive option for Air Algerie, despite some dissatisfaction with the last contract Air Algerie signed with Boeing. According to Bouabdallah, Air Algerie signed that contract for the purchase of 737-600 aircraft which turned out not to be the most economical choice of the various 737 options available to them at the time, given its smaller baggage hold. He said he hoped Boeing would discuss and guide them through the options and help us choose the one that makes the most sense. Bouabdallah also mentioned a finance rate of 5.25 percent on Air Algerie's last Boeing deal, saying that he now knows they could have done better, as he said he has seen other current aircraft financing arrangements on the market of between 2 and 3 percent. Finally, he said that the French-U.S. joint venture CFM engine for the 737-600 and 800s had given them some problems on routes in southern Algeria, since the engines had not received the appropriate internal coating to protect it against sand. (He also noted that Air Algerie had experienced greater problems with its two Airbus 310 aircraft, which he said would likely be taken out of passenger service soon.) ¶3. (U) Bouabdallah said he had no aviation background and simply wanted to make the right choice: "I have no religion" regarding the Boeing-Airbus rivalry, he said. But he pointed out that despite Boeing's history with Air Algerie, Airbus was "playing on their geographical advantage" and pushing hard to break Boeing's market share in Algeria. Since the last Air Algerie visit to Boeing was approximately three years ago, according to Mahiout, the Ambassador stressed that it was high time for a visit, adding that we would transmit Bouabdallah's message to Boeing immediately. FORD