IAG orders 200 Boeing 737 MAX jets in vote of confidence
The deal is worth more than $24bn at list prices, with the BA owner saying it has ‘every confidence’ in Boeing
Le Bourgeot — Boeing won a major vote of confidence at the Paris Airshow on Tuesday as British Airways (BA) owner IAG signed a letter of intent to buy 200 of its 737 MAX aircraft that have been grounded since March after two deadly crashes.
The deal, worth more than $24bn at list prices, came as European rival Airbus also bagged a series of orders for its newly launched A321XLR model, easing investors’ concerns about a sharp slowdown in demand for commercial jets.
“We have every confidence in Boeing and expect that the aircraft will make a successful return to service in the coming months,” IAG CEO Willie Walsh said of the 737 MAX.
Walsh, a former 737 pilot, said he would have “no hesitation” in flying on the plane, and voiced confidence in its safety.
Boeing’s top-selling plane has been grounded since an Ethiopian Airlines 737 MAX crashed in March, five months after a Lion Air 737 MAX plunged into the sea off Indonesia. A total of 346 people died in the two disasters. Boeing is locked in negotiations with regulators to get a modified version of the plane flying again.
“We can’t thank you enough for the confidence you placed in the Boeing family,” Boeing’s head of commercial airplanes Kevin McAllister said in response to IAG’s support. IAG said it planned for the mix of 737-8 and 737-10 aircraft to be delivered between 2023 and 2027.
At 2.50pm GMT, Boeing shares were up 1.9% at $361.5. Airbus shares were up 0.8%, and earlier hit a record high of €126.5 after the European plane maker struck a series of deals.
These included a $6bn order for 36 planes from Philippines airline Cebu Air, including 10 of the new long-range A321XLR model that Airbus launched on Monday, and a deal to sell a further 30 A320neo aircraft to Saudi Arabian Airlines, worth $3.3bn at list prices.
The flurry of activity could help soothe investor nerves that a decade-long boom in demand for commercial aircraft is coming to an abrupt end.
With airlines struggling to contend with overcapacity, slowing economies and geopolitical tensions, some analysts warn Airbus and Boeing could face a growing number of cancellations from their bulging order books.
But the plane makers remain confident of continued strong demand for more fuel-efficient jets as emissions regulations tighten and air travel continues to rise, driven by Asia’s growing middle classes. On Monday, Boeing increased its 20-year industry demand forecast.
“Although investors have started to ask questions about the state of the upcycle, the aerospace industry remains very confident in the current state of the market,” analysts at Vertical Research Partners said in a note.
Sources familiar with the matter say that American Airlines and leasing giant GECAS are also in talks to buy Airbus’s new A321XLR, which is aimed at helping airlines deliver new routes with smaller planes and stealing a march on Boeing’s own plans for a potential new mid-market jet.