For roughly 30 hours this week the clouds of gloom and doom hung of Boeing‘s chalet at Le Bourget. Orders were scarce while rival Airbus trotted out deal after deal, many including the new A321XLR that aims to dim Boeing’s NMA hopes. That changed on Tuesday, however. The company scored a solid widebody order from Korean Air, deepening that relationship. And then the bombshell: A 200 plane Letter of Intent from International Airlines Group (IAG), parent company of British Airways, Iberia, Aer Lingus, Vueling and Level. And it not just any 200 planes. It is 200 of the 737 MAX, still grounded since the Ethiopian Airlines crash in March.
We’re very pleased to sign this letter of intent with Boeing and are certain that these aircraft will be a great addition to IAG’s short-haul fleet. We have every confidence in Boeing and expect that the aircraft will make a successful return to service in the coming months having received approval from the regulators.
– Willie Walsh, IAG chief executive
IAG will take a mix of the MAX 8, capable of carrying 178 passengers in a two-class configuration and the MAX 10, with up to 230 seats. Given the typical EuroBiz layout that 178 number may be low for the total capacity once IAG chooses its configurations. Many of the aircraft are expected to fly for the LCC operations Level and Vueling, further hinting at a higher density arrangement. Other comments at the show suggest that British Airways might take some for its Gatwick operations. The overall distribution of types and airlines will come later, after the order is finalized and after IAG chooses how to allocate the fleet. Deliveries of the new planes are slated for 2023-2027.
The move to add the 737 family into the IAG fleet reverses a long-running Airbus exclusivity among the carriers. Among other things, IAG CEO Willie Walsh flew the 737 simulator with the MCAS fixes installed before agreeing to the deal. This is the configuration Boeing is expected to submit to the FAA and other regulators for certification imminently.
Looking Forward
Many expected a 737 MAX order would come during the show, just not one this large. And odds are Boeing did not have to pay IAG to take them off its hands. Yes. the planes are grounded and resuming the normal flow of manufacturing and delivery will be painful for the company. But the grounding will end and the planes will return to the skies. Moreover, passengers will fly them again, despite many surveys today suggesting otherwise. Travelers famously announce their intentions on myriad facets of air travel, only to ultimately vote with their wallet. It appears unlikely that trend will shift with the newest 737s.
Airlines and aircraft manufacturers build models and plans around longer term scenarios and the situation five years from now is almost certain to be more stable for Boeing and the industry in general.
With the LoI in hand Boeing edges ahead of Airbus in total aircraft orders announced during the first two days of the show according to the Flight Global order tracker. While that statistic is mostly meaningless to travelers overall, there is some pride and reputational consideration in play. And, of course, two days remain for more orders.
Perhaps more significant is that the total volume of orders at the show is as high as it is. The 635 planes accounted for so far (only 118 firm orders, though), beats the expectations of some experts and suggests that airlines are still not ready to slow down their fleet renewal and expansion plans.
More from the 2019 Paris Air Show
- Airbus A321XLR: The future of single-aisle long-haul travel
- IAG makes a MAX move in Paris
- SmartSky boosts sales channel with Honeywell Aerospace VAR deal
- Different business models, same aircraft model: American, Frontier and JetBlue take on the A321XLR
- Boom’s supersonic timing slips
- Mitsubishi’s SpaceJet buys Bombardier’s support
- LiFi takes flight with Air France, Latécoère
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There’s absolutely no way that Boeing didn’t cut IAG a great deal here.
Walsh is a horrible human being but he’s no idiot and he knows all too well just how desperate Boeing is to rehabilitate the 737MAX.
If Boeing wasn’t cutting a deal IAG/Walsh have no reason to give Boeing the huge boost today’s LOI gave it (and they have no reason to announce the LOI before the 737MAX is re-certified).
The idea that Boeing got such a massive ‘win’ today and that IAG got nothing in return is nonsensical and, IMO, fanciful.
I have no doubt the order received discounts. I am not as convinced, however, that it was a complete giveaway.