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In a Boost for Boeing, British Airways Owner Orders 50 737-MAX Aircrafts worth $6.25 Billion

AFP

Last Updated: May 20, 2022, 11:04 IST

Image used for representation. (Image: Reuters)

Image used for representation. (Image: Reuters)

International Airlines Group added in a statement that it also has an option to purchase 100 more Boeing 737 MAX planes

British Airways owner IAG on Thursday ordered 50 Boeing 737 MAX aircraft worth $6.25 billion at list prices, in a boost for the crisis-hit jet after two deadly crashes. The deal comes also amid signs of recovery in the global aviation sector, which was ravaged by the deadly Covid pandemic. Analysts however expressed doubt over whether it was a vote of confidence for both Boeing and the aviation industry as a whole. The US titan last month logged a $1.2-billion first-quarter loss, weighed down by costs of its Russia business, the Air Force One presidential jet, and its delay-hit 777X plane in a growing litany of problems.

– ‘Latest generation’ –

International Airlines Group has reached an agreement for 25 Boeing 737-8200 jets, also called the 737 MAX, and 25 of its 737-10 aircraft at a “substantial” discount. IAG added in a statement that it also has an option to purchase 100 more MAX planes. The fuel-efficient MAX jets will be delivered between 2023 and 2027 to replace ageing aircraft in IAG’s fleet.

IAG, which owns also Spanish carriers Iberia and Vueling, said the order was subject to approval by shareholders.

“The addition of new Boeing 737s is an important part of IAG’s short-haul fleet renewal,” IAG chief executive Luis Gallego said in the statement. “These latest-generation aircraft are more fuel-efficient than those they will replace and in line with our commitment to achieving net zero carbon emissions by 2050.”

While Boeing has resumed deliveries of the 737 MAX after a lengthy grounding following the fatal crashes, the company has halted deliveries of the 787 since May 2021 while it works through production problems.

– ‘No vote of confidence’ –

CMC Markets analyst Michael Hewson told AFP that the order was “more about the (aviation) industry’s woes than anything else”. IAG “gets a discount for replacing its older less fuel-efficient aircraft and Boeing gets to offload its 737-MAX planes which it is struggling to offload in the wake of the two crashes which trashed its reputation”, he said.

“It’s certainly not a vote of confidence in the conventional sense.”

The European airlines conglomerate had initially announced its intent to buy 200 MAX jets three years ago at the Paris Air Show, despite deadly crashes involving the aircraft in 2018 and 2019.

The 737 MAX was temporarily grounded worldwide following two crashes in Indonesia and Ethiopia that killed a combined 346 people.

“The order of fifty Boeing 737 MAX jets by IAG provides a much-needed booster shot of confidence for the US aircraft manufacturer,” Hargreaves Lansdown analyst Susannah Streeter told AFP.

“This deal has been a long time coming and has been significantly scaled down from hopes of 200 aircraft, but it still represents a lift for the company which has been buffeted by winds of turbulence over its order book, production delays, supply chain worries, and inflation.”

– ‘Kick in teeth’ for Airbus –

The news also dealt a heavy blow to Boeing’s fierce European rival manufacturer Airbus. “This is a surprising and very big kick in the teeth for Airbus,” noted independent aviation analyst Howard Wheeldon. “The discount must have been pretty massive and we live in hope that there are no implications of Airbus’ failure to secure more single aisle business from IAG in the UK.”

IAG, which flies also Irish carrier Aer Lingus, recently forecast a return to annual profit after narrowing Covid-induced losses as travel restrictions are eased. The group had collapsed into annual losses during 2020 and 2021 as the pandemic slammed demand.

Also Thursday, no-frills carrier EasyJet said its first-half net losses improved after Covid travel curbs were lifted across Europe. The news came after Irish rival Ryanair slashed its annual losses.

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first published:May 20, 2022, 11:04 IST
last updated:May 20, 2022, 11:04 IST