Boeing Co won a provisional order, worth US$21.7 billion at list prices, from Indonesian budget carrier Lion Air for 230 of its 737 aircraft, in what would be a record transaction for the US planemaker.
The commitment consists of 201 of the new 737 MAX model, which features upgraded engines, and 29 extended-range 737-900s, according to a statement.
US President Barack Obama yesterday attended a signing ceremony for the deal in Bali, Indonesia, which coincided with a summit of Southeast Asian leaders.
“There has been a lot of big orders coming out of Asia lately,” said Shin Ji Yoon, an analyst at KTB Investment & Securities Co in Seoul. “Travel demand will just grow and grow.”
Lion Air’s commitments are included in the 700 agreements for the 737 MAX that Boeing -Commercial Airplanes president Jim Albaugh cited this week at the Dubai air show.
Boeing also said on Thursday that lessor Aviation Capital Group plans to buy 35 of the 737 MAX jets and 20 of the current 737-800s, while Singapore Airlines Ltd firmed an order for eight 777s valued at US$2.4 billion at list prices.
Boeing expects to complete the Lion Air deal, which will include 150 options for more planes, “fairly shortly,” company spokesperson Wilson Chow said at the signing ceremony, without elaboration.
The Chicago-based planemaker expects to begin delivering 737 MAX aircraft to customers in 2017, he said.
“This is a remarkable example of the trade, investment and commercial opportunities that exist in the Asia-Pacific region,” Obama said at the signing ceremony.
Airbus SAS in June announced an order for 200 A320neo planes from Malaysia-based AirAsia Bhd, a day after confirming an agreement for 180 A320 and A320neo planes from Indian carrier IndiGo. The A320neo is a revamped version of the A320, which competes with Boeing’s 737.
Jakarta-based Lion Air flies an all-Boeing fleet consisting of 737 models in different configurations and MD-90 jets, according to its Web site. The airline had 126 single-aisle Boeing jets on order through last month, according to the Web site. Lion Air has received 52 aircraft since its first order in June 2005.
“There is structural demand for travel in Asia and we do expect that will continue over the long term,” said Andrew Orchard, a Hong Kong-based analyst at Royal Bank of Scotland Group PLC. However, Orchard was “a little bit surprised” by the size of the latest Lion Air agreement, he said.
Boeing’s Lion Air accord marks the second record broken this week by the 95-year-old company, after Emirates ordered 50 widebody 777s with a list value of US$18 billion on Sunday last week. Options for 20 more jets would push the value of that deal to US$26 billion.
The Lion Air accord “is a big deal,” said Rob Stallard, a New York-based analyst with RBC Capital Markets who has an “outperform” rating on Boeing. “It gives a meaningful boost to Boeing’s backlog and MAX order book.”
Once it is signed, Lion Air’s order will be Boeing’s biggest by value and number of planes. The largest by value before this week was Air India’s agreement to buy US$11 billion in various models in 2006.
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