International Airlines Group (IAG), which owns airlines such as British Airways, has signed a letter of intent with Boeing for 200 737 MAX aircraft.
It’s been nearly 4 months since the Boeing 737 Max’s were grounded following 2 lethal crashes.
Now, Boeing seems to be slowly winning back favor from the industry, with International Airlines Group (IAG) interested in a 200 plane order.
Boeing winning customers back?
IAG, which owns British Airways and other airlines, signed a letter of intent (LOI) with Boeing at the Paris Air Show currently taking place. The deal, according to list prices, is valued at $24 billion. Theo Leggett, BBC business correspondent, reminds however that a “substantial discount” was negotiated by IAG's savvy chief executive Willie Walsh.
The deal includes a mix of 737-8 and 737-10 aircraft, which would be delivered between 2023 and 2027.
According to Boeing, IAG is one of the world's largest airline groups with 582 aircraft flying to 268 destinations, carrying 113 million passengers in 2018.
"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," said Willie Walsh, IAG chief executive. "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."
In selecting the 737 MAX, IAG says it will fly a combination of the 737 MAX 8 and the larger 737 MAX 10 jet. The airline did not disclose a specific split between the two MAX models, though it anticipates deploying the aircraft at a number of the group's airlines including Vueling and LEVEL.
Boeing shares rose 5.37% following the announcement on Tuesday.
Restoring the Boeing name and brand
The American planemaker currently has around 4,500 unfulfilled orders for the 737 MAX, BBC noted. Of those orders, a 175 aircraft purchase was made by flydubai, Boeing’s 2nd largest customer globally, and the 1st in the Middle East. Boeing said the order was worth $27 billion at the time.
However, just because IAG has shown interest, doesn’t mean they have committed to the purchase.
“This is not a firm order, and strictly speaking, IAG could change its mind if it wanted to - but it will still come as a huge boost for Boeing, at a show where it has been struggling to dispel the clouds hanging over its business,” Leggett explained.
Still, this show of confidence could help boost morale in the industry following Boeing’s battered reputation as of late. CNBC reminds that Boeing “cut production of the 737 Max, its best-selling aircraft ever, by one-fifth and suspended deliveries of the planes after they were grounded.”
Airlines stuck with the grounded planes have voiced discontent ever since the mass grounding was sanctioned.
Last month, Bloomberg reported that “China’s biggest airlines are considering banding together to seek compensation from Boeing Co. for the disruption caused by the grounding of the U.S. aircraft manufacturer’s 737 Max,” as per information gained from people with knowledge of the matter.
Boeing was supposed to have completed a software fix in recent weeks, addressing the plane’s fatal flaw, but has yet to submit it to the Federal Aviation Administration (FAA).
Boeing considering a name change for 737 MAX?
Recently, Bloomberg reported that Boeing was actually considering a name change for its now infamous plane, quoting the company’s Chief Financial Officer Greg Smith in a brief interview they conducted at the Paris Air Show.
"I'd say we're being open-minded to all the input we get," he said, according to the Bloomberg report. "We're committed to doing what we need to do to restore it. If that means changing the brand to restore it, then we'll address that. If it doesn't, we'll address whatever is a high priority."
Boeing later explained that it has “no plans” to change the aircraft’s name.
“Our immediate focus is the safe return of the MAX to service and re-earning the trust of airlines and the traveling public,” a spokesman said in an emailed statement to Reuters. “We remain open-minded to all input from customers and other stakeholders, but have no plans at this time to change the name of the 737 MAX.”