Tags: Aeromexico | Boeing | jet | Order

Aeromexico Places Historic $11 Billion Boeing Order

Wednesday, 25 Jul 2012 11:22 AM

Mexico's largest airline Aeromexico on Wednesday placed an $11 billion provisional order with Boeing, in what the company said was the biggest aircraft investment by a Mexican airline in that country's history.

The order is for ninety 737 MAX 8 planes and 10 787-9 Dreamliners, Aeromexico said in a statement that did not provide specifics on financing arrangements.

A company spokesman said the deal would allow Aeromexico to overhaul its existing fleet of 110 aircraft, a trend among carriers worldwide as they seek to reduce fuel bills.

Over the longer term, the company aims to own half of its entire fleet and to lease the other half, he added, without going into detail on the current purchase.

Aeromexico, which went public last year, said the Dreamliners will begin arriving in the summer of 2013 and the 737 MAX 8 aircraft will be delivered starting in 2018.

The company will make its first pre-delivery payment of $40 million before the end of the year, when it expects to sign the purchase agreement.

Aeromexico can easily finance that with its cash position, Chief Executive Andres Conesa said on a conference call with analysts. The next important payment will be in 2015, he added.

The latest order comes on top of a 20-aircraft package that Aeromexico announced last year, for 10 Embraer jets and 10 Boeing 737-8 NG.

Delta Air Lines in June bought a 4 percent stake in Aeromexico for $65 million. The Aeromexico spokesman did not say whether the U.S. airline would contribute toward payment for the order.

Aeromexico increased its market share after rival Mexicana ceased operations before filing for bankruptcy in 2010.

The Mexican airline's shares dropped 1.25 percent to 21.40 pesos in morning trading.


Boeing, which posted better-than-expected results on Wednesday, is on track to overtake rival Airbus in plane deliveries this year.

Boeing is in the midst of booking orders for the revamped 737 as it catches up with the latest version of Airbus' A320, which produced great demand and redrew the battle lines between the world's top planemakers last year.

Both aircraft achieve fuel savings of around 15 percent due to new engines and other enhancements.

General Electric, which competes with Rolls-Royce (RR.L) to power the 787, said it had won a deal worth $400 million to provide the engines for the 10 Dreamliners.

A joint venture between GE and France's Safran is the sole engine supplier for the 737.

Mexico City-based Aeromexico, which operates some 600 flights a day, on Tuesday said revenue during the second quarter rose 15 percent to 9.9 billion pesos ($742 million) from 8.6 billion pesos in the same period last year.

The firm's profit dropped 73 percent to 152.9 million pesos ($11.5 million) from 583.5 million pesos in the year-earlier period because of a pickup in expenses and financing costs.

© 2018 Thomson/Reuters. All rights reserved.

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Wednesday, 25 Jul 2012 11:22 AM
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