Tags: air lease | boeing | 737 max | jetliner

Air Lease Said to Have Draft Order for Boeing Jets

Monday, 30 April 2012 05:38 PM

Aircraft lessor Air Lease Corp has emerged as one of the unidentified buyers that provisionally ordered Boeing's new 737 MAX aircraft, in a deal potentially worth up to $6 billion at list prices, industry sources said on Monday.

The deal is expected to involve 60 of the fuel-efficient jets, but is already included in Boeing's list of commitments that still must be converted to firm orders, according to the two sources who asked not to be named because negotiations remain confidential.

The MAX, which will feature new fuel-efficient engines when it comes to market in 2017, competes with the upcoming Airbus A320neo, which also will have new engines.

Neither Air Lease nor Boeing would comment on the tentative order.

Air Lease also has a pending provisional order for 36 of the planemaker's revamped A320neo-family aircraft and has made plans to close an order for a further 16 such jets in January 2013.

Industry experts believe Air Lease could announce the MAX order and possibly both at the Farnborough Air Show in July.

The Wall Street Journal reported on Monday that Air Lease was close to a deal to finalize the 737 order.

Air Lease Chief Executive Steven Udvar-Hazy has been critical of decisions, first by Airbus and then Boeing, to re-engine their best-selling jets rather than completely redesigning them.

A redesign would have generated greater fuel efficiency but taken longer to bring to market.

Boeing and its European competitor have notched up more than a combined 2,500 firm and provisional orders for the two series of revamped jets, which aim to provide 12-15 percent fuel savings to airlines from the middle of this decade.

Speaking at a conference last week, Udvar-Hazy conceded neither manufacturer was likely to build an all-new model in the crucial 100- to 200-seat market soon, and indicated that the leasing companies would throw their weight behind the new models.

"For the time being, what we have is what we know," Udvar-Hazy told the AFCA air finance conference in Barcelona.

Udvar-Hazy, an influential figure credited with pioneering the modern aircraft leasing business, said he saw most demand for aircraft at the higher end of the 100- to 200-seat category, corresponding to the 180-seat Airbus A321 and Boeing 737 MAX 9.

"The large end of the narrowbody spectrum is where most sales will occur," he said, adding the average number of seats per airline departure was gradually rising.

Leasing companies tend to place orders where they think there will be most liquidity in the market.

Udvar-Hazy's remarks indicate a bigger emphasis on the MAX 8 and MAX 9 models than the smallest family member, the 737 MAX 7.

However, analysts say many buyers will wait for further clarity on the design of the 737 MAX before completing orders.

Airbus leads the race to sell the improved fuel-efficient models. It has won 1,289 firm orders and 266 provisional orders, including the 36 Air Lease A320neo jets waiting to be finalized.

Boeing, which initially backed a new airplane before reluctantly deciding to catch up with Airbus by re-engining the 737, has sold 451 MAX aircraft and won provisional orders for 135 from declared customers and over 400 that are unidentified.

United Continental Holdings is finalizing a deal with Boeing to buy at least $10 billion worth of revamped and current models after Airbus was bumped out of the race, industry sources say.

Continental, an all-Boeing airline which merged with United in 2010 to form the world's largest carrier, already operates the largest 737 models.

Udvar-Hazy co-founded AIG's International Lease Finance Corp unit in 1973 and resigned to run Air Lease Corp in February 2010.

© 2019 Thomson/Reuters. All rights reserved.

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Monday, 30 April 2012 05:38 PM
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