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Lufthansa signals major wide-body jet order

The tails of German air carrier Lufthansa aircraft are seen at Fraport airport in Frankfurt May 6, 2013. REUTERS/Lisi Niesner
The tails of German air carrier Lufthansa aircraft are seen at Fraport airport in Frankfurt May 6, 2013. REUTERS/Lisi Niesner

By Marilyn Gerlach

FRANKFURT (Reuters) - Deutsche Lufthansa signaled its second major aircraft order in six months on Wednesday, saying its supervisory board had backed a long-haul fleet plan that industry watchers expect to benefit Airbus and Boeing .

The German airline group said it would hold a news conference to outline the multi-billion-dollar investment at 11 a.m. local time (0900 GMT) in Frankfurt on Thursday.

Lufthansa is in the middle of a deep revamp that includes 3,500 job cuts, while investing in modern jets to cut its fuel bill and catch up with Middle East rivals particularly on the highly fought over routes between Europe and Asia.

On Friday, two people familiar with the matter said Europe's largest airline by revenue was putting the finishing touches to a deal worth well over $10 billion at list prices to be split between the world's top planemakers.

The purchase of dozens of aircraft will include the first provisional order for a revamped version of Boeing's most popular big jet, currently code-named 777-9X, the people said.

An order for the 406-seat model would be subject to its formal launch, which the U.S. planemaker expects by year-end. It is expected to enter service around the end of the decade.

Lufthansa also plans to purchase around 20-25 Airbus A350-900 jets, the European manufacturer's latest model which is due to enter service in the second half of 2014, they said.

The combined order could be worth $17 billion at list prices based on estimated values for the 777-9X, whose new wings and engines are expected to command a premium to existing 777s.

The deal follows a contest for about 50 aircraft but the final volumes could vary, industry sources said.

The order is likely to be a boost for engine manufacturers Rolls-Royce and General Electric , which power the A350 and latest versions of the 777 respectively.

Lufthansa provided no details of the purchase ahead of Thursday's news conference.

The event will be the first public appearance by Chief Executive Christoph Franz since he abruptly announced he was quitting to become chairman of Swiss drugmaker Roche .

Lufthansa said on Monday that Franz would not seek a renewal of his term, which expires in May next year.

Wednesday's supervisory board meeting was expected to discuss potential candidates to replace the 53-year-old, whose unexpected departure comes at a critical juncture of the group's restructuring program.

Under Franz, Lufthansa has pushed through a cost-cutting program now in its second year to boost operating profit to 2.3 billion in 2015 from 524 million in 2011, and partly fund investments in modern planes and new cabin products.

In March, Lufthansa confirmed an order for 100 Airbus short-haul jets worth $10 billion at list prices.

Lufthansa posted a 27 percent decline in second-quarter operating profit to 431 million euros ($570.4 million) on largely flat sales at 7.84 billion euros, both below consensus.

Air France provided further evidence of the malaise gripping former state-owned European airlines by announcing 2,800 fresh job cuts on Wednesday.

(Reporting by Marilyn Gerlach; Writing by Tim Hepher; Editing by Maria Sheahan and David Evans)

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