After intense scrutiny over safety and its public image, Boeing Co on Tuesday won a vote of confidence as International Airlines Group (IAG), the parent company of British Airways PLC, signed a letter of intent to buy 200 of its 737 Max jets that have been grounded since March after two deadly crashes.
The surprise order lifted the energy of a previously subdued air show, where the talk had been of the possible end of the aerospace cycle, given the challenges at Boeing and Airbus SE, as well as geopolitical and trade tensions around the world.
It was not immediately clear how many of the 200 aircraft would wind up as firm orders and how many would be options, nor how it would affect Airbus’ presence at IAG, which placed an order for 14 A321XLR hours before the announcement.
Photo: Reuters
“It’s a great coup, but for now it’s a communications coup as it’s a letter of intent. We will see what kind of deal lies behind it,” a European industry source said.
Even so, Boeing was expected to try to capitalize quickly on the move and seek further support for the Max as it offers airlines other big packages at attractive prices.
The combination of 737 Max 8 and 737 Max 10 planes would cost US$24 billion at list prices, although companies usually strike deals for discounts. The planes would be delivered between 2023 and 2027 to airlines owned by IAG.
IAG expressed optimism that regulators would allow amended Max jets to fly again soon, but it is unclear when that would be, notably for regulators outside the US.
Australia’s Qantas Airways Ltd yesterday said that it would order 10 Airbus A321XLR jets and convert a further 26 from existing orders already on the plane maker’s books.
Airbus is also in talks with leasing company GE Commercial Aviation Services and has been trying to secure eye-catching orders for the A321XLR from JetBlue Airways Corp and American Airlines Group Inc, although the world’s largest carrier does not typically announce deals at air shows.
The European plane maker has been negotiating with US investor Bill Franke, whose Indigo Partners has been known to place orders for multiple airlines within its portfolio and could close a deal at the Paris Air Show, industry sources said.
Airbus sales chief Christian Scherer said that there was some softness in the market, but did not see an increase in cancelations.
He told investors he expected to win more orders for the smaller A220, formerly known as CSeries.
Airbus and Boeing are cushioned by thousands of orders for the single-aisle jets.
Airbus CEO Guillaume Faury predicted a pickup in orders after a slow start to this year, and voiced concerns about trade tensions and the growing risk of a no-deal Brexit.
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