Boeing lands $7.2B order from Air Lease Corp.

  • Associated Press and Bloomberg News
  • Monday, July 9, 2012 10:41am
  • Business

FARNBOROUGH, England — The Boeing Co. clinched the first big deal of this year’s Farnborough International Airshow on Monday with a firm order from Air Lease Corp. for 75 of its redesigned 737 aircraft worth $7.2 billion.

The order is a big win for the Chicago-based company at the opening of the weeklong air show near London and is the first for the MAX, a new version of the best-selling 737, by a leasing company.

There’s more to come. Boeing is set to win another order this week, from United Continental Holdings Inc., for 100 of the planemaker’s 737 jets in a transaction that may be valued at about $8.4 billion, people familiar with the matter said.

The United accord is to include options for as many as 100 more jets and will be announced Thursday in Chicago, said two of the people, who asked not to be identified because details aren’t public.

United’s mix of MAX jets and current 737s will determine the jets’ list value. The 737-8, the top-selling existing model, retails for $84.4 million, and the MAX 8, the equivalent new plane, is $95.5 million, according to Boeing’s website.

Air Lease Corp., meanwhile, is “an ideal partner to help establish the 737 MAX in the leasing market,” said Ray Conner, Boeing’s new Commercial Airplanes president and chief executive.

The MAX incorporates new technologies designed to make the aircraft more efficient, reliable and comfortable. So far, Boeing has secured orders and commitments for more than 1,000 of the aircraft.

Los Angeles-based Air Lease, which buys planes and leases them to airlines, also has the right to purchase a further 25 planes. The order will take several years to deliver. ALC has ordered a total of 170 airplanes from Boeing. Although the order has a list price of $7.2 billion, purchasers rarely pay the full price for an order of this size.

“The 737 MAX is an excellent addition to our portfolio and the ideal complement to our growing fleet of Next-Generation 737-800s,” said Steven Udvar-Hazy, chairman and CEO of Air Lease. “The 737 MAX represents a step-change improvement that our airline clients need to compete in the future.”

Expectations are high that Boeing will clinch a raft of deals for the plane as it tries to catch up with Airbus in orders for single-aisle aircraft. Airbus, which is a subsidiary of EADS, won the battle for orders at last year’s Paris Airshow. Paris and Farnborough alternate years.

So far, the only deal Airbus has announced at Farnborough is the sale of four A321neos to Arkia Israeli Airlines, the second biggest Israeli airline. The order, which has a list value of around $450 million, makes the airline a new Airbus customer and the first airline in Israel to order the A320 neo family.

This year’s air show is taking place at a time when the global economy is showing signs of slowing down and governments around the world are cutting back costs on military spending as they grapple with high debt levels. The combination of a faltering economy and lower government spending is a difficult combination for the aviation industry as air travel tracks global economic growth.

Airbus also revealed Monday that it plans to enhance its mid-sized long-haul A330 range of aircraft to give it a longer flying range. For the A330-300, Airbus is planning to increase the maximum take-off weight to 240 metric tonnes from 235.

By giving the plane the ability to carry more fuel — combined with greater fuel efficiency — Airbus said the A330-300 will now be able to make longer journeys. For example, Seattle will now be accessible from Beijing, as will Tokyo from London.

“The aircraft is the most popular aircraft ever in its category and looks set to hold this position for years to come,” said John Leahy, chief operating officer customers of Airbus.

The United order is carrier’s first since a 2010 merger of former United parent UAL Corp. and Continental Airlines Inc. Boeing was Continental’s exclusive plane supplier for two decades, and the accord deepens ties between the world’s largest airline and the biggest aerospace company. United declined to comment, said Christen David, a spokeswoman. A Boeing spokesman, Tim Bader, said the company had no comment.

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