The ongoing battle between Airbus and Boeing for supremacy of the skies continued this week as the two commercial aviation giants announced dueling billion-dollar aircraft deals.
Boeing—long the favored plane builder among airlines based on this side of the Atlantic—has struggled of late as a result of the persistent battery malfunctions that have kept its fleet of 787 Dreamliner jumbo jets grounded. Now that the Federal Aviation Administration has approved a redesign aimed at fixing the flaw, the troubled fleet is poised to retake the skies within weeks.
With the Dreamliner problems nearly behind it, Chicago-based Boeing announced Tuesday that it has reached a deal valued at $15.6 billion under which the world’s second-largest commercial jet manufacturer after Airbus will provide Irish discount carrier Ryanair with 175 single-aisle 737 passenger planes.
Boeing general counsel J. Michael Luttig and Brett Gerry, assistant general counsel for Boeing Commercial Airplanes, took the lead legal advisory roles for the company on its deal with Ryanair. Gerry, a former chief of staff to U.S. Attorney General Michael Mukasey—who left public service in 2009 to become a partner at Debevoise & Plimpton—spoke publicly last fall about the future of the company founded in 1916 by aviation industry pioneer William Boeing.
Boeing’s in-house department also includes Wanda Denson-Low, a senior vice president for the company’s office of internal governance. Former U.S. trade representative and current Mayer Brown consultant and strategic adviser Susan Schwab has served as an independent member of Boeing’s board of directors since 2010.
Luttig joined Boeing as the company’s top in-house lawyer in 2006, when he resigned from a seat on the U.S. Court of Appeals for the Fourth Circuit. He made the move despite being considered a candidate to ascend to the U.S. Supreme Court, according to a story at the time by sibling publication The National Law Journal. (In an unusual coincidence, the nation’s high court once reviewed a case involving a man consigned to death row for killing Luttig’s father. Justices Antonin Scalia, David Souter, and Clarence Thomas recused themselves from the matter because of prior relationships with Luttig.)
During his tenure at Boeing, Luttig has taken the lead on several high-profile airplane transactions, including two major deals in 2011: the $18 billion sale of 50 planes to Dubai-based Emirates Airlines and a $38 billion order for 460 commercial jets with American Airlines parent AMR on which the company teamed with Airbus, according to our previous reports.
For his efforts, Luttig is one of the nation’s highest-paid in-house lawyers, according to the latest edition of sibling publication Corporate Counsel‘s GC Compensation Survey, which shows that the Boeing legal chief’s 2011 pay package topped $2.6 million.
As for Ryanair, the Dublin-based airline’s director of legal and regulatory affairs, Juliusz Komorek, did not respond to a request for comment about whether it relied on outside legal advisers for the Boeing deal, which Reuters reports will increase the discount carrier’s fleet of planes from 300 to 400.
Ryanair’s big Boeing buy comes about a month after European regulators blocked the company’s third attempt to acquire rival Irish airline Aer Lingus Group, in which Ryanair already holds a nearly 30 percent stake thanks to an E.U. court ruling three years ago. A trio of firms—top Irish shop A&L Goodbody, Covington & Burling, and London’s Monckton Chambers—have taken the lead in representing Ryanair in the Aer Lingus matter.
The Am Law Daily reported last year that Cleary Gottlieb Steen & Hamilton had also stepped in to provide antitrust counsel to Ryanair on its latest ill-fated $883 million hostile takeover of Aer Lingus. Cleary also took the lead for Ryanair last month on the company’s $135 million deal with British airline Flybe to create a new carrier as part of Ryanair’s effort to satisfy regulators’ concerns about its bid for Aer Lingus, according to U.K. publication Legal Week. A Cleary spokeswoman says the firm is not involved representing Ryanair on its current deal with Boeing.
In the week’s second major plane transaction, Boeing’s archrival Airbus announced Monday that it had reached an agreement worth $24 billion to supply 234 planes to Indonesia’s PT Lion Mentari Airlines. The deal comes a little more than a year after Lion Air—one of Asia’s fastest-growing airlines—bought 230 aircraft worth $21.7 billion from Boeing. But instead of President Barack Obama touting another contract with Boeing, this week President Francois Hollande of France was on hand for a signing ceremony for Lion Air’s deal with Airbus that will secure 5,000 jobs over 10 years, according to The Guardian.
British firm Stephenson Harwood, which advised Lion Air on that November 2011 agreement with Boeing and a $138 million bond offering last year, is again taking the lead for the Jakarta-based airline on its agreement with Airbus. Paul Ng, global head of aviation at Stephenson Harwood in Singapore, is leading a team of firm lawyers advising Lion Air that also includes associates David Hon and Ethan Tan. (Stephenson Harwood hired Ng four years ago this month from Magic Circle firm Freshfields Bruckhaus Deringer.)
Airbus—a suburban Toulouse, France–based subsidiary of European aerospace and defense giant EADS—did not use outside legal counsel on the deal with Lion Air, which is the second major plane sale that the European aircraft manufacturer has recently announced. In February, Airbus secured a $9 billion order to deliver 39 jumbo jets to Hungarian billionaire Steven Udvar-Hazy‘s Air Lease Corporation.
Airbus general counsel Oliver Furtak and Robert Geckle Jr., general counsel and chief compliance officer for Airbus Americas, did not respond to requests for comment about the names of those in-house attorneys that handled the deals with Air Lease and Lion Air.
Grant Levy, an executive vice president of Air Lease who stepped down as general counsel last September to make way for new in-house legal chief Carol Forsyte, a former in-house lawyer at Motorola Mobility, took the lead for the Los Angeles–based aircraft leasing company on its agreement with Airbus.
Air Lease, founded in 2010 by former executives of AIG’s aircraft finance unit ILFC, raised more than $800 million through an initial public offering in 2011 that yielded $2 million in legal fees and expenses for the company’s lawyers from Munger, Tolles & Olson, according to our previous reports. AIG, which tapped Debevoise for counsel on its $4.2 billion sale of ILFC in December, filed a trade secrets suit last year in California state court against Air Lease and several of its executives—including Levy—that eventually settled last November.
The Airbus and Boeing deals are just the most recent commercial aviation–related matters to pull in outside counsel.
Nearly a dozen Am Law 100 firms, for example, have climbed aboard for the proposed $11 billion merger announced in February between US Airways Group and bankrupt AMR. One of those firms is Skadden, Arps, Slate, Meagher & Flom, which while serving as counsel to AMR’s official unsecured creditors committee, was also working as restructuring counsel to Hawaii Island Air—a tiny carrier sold late last month to Oracle founder and billionaire Larry Ellison in a deal that saw DLA Piper and Wiley Rein also advise, according to our previous reports.