Not afraid of the 737 MAX: Boeing logs first scalable orders
The order book for the Boeing 737 MAX, stagnant since the global grounding of the jet in March 2019, has seen a major boost at the Dubai Airshow. Airlines have given the MAX their seal of approval with a total of 50 orders placed within just two days of the event. It comes at a crucial time for Boeing, as the manufacturer aims to shore up support for the 737 MAX before its return to the skies currently expected in early 2020.
A day after securing the first firm order for the 737 MAX from Turkish carrier SunExpress, Boeing and Air Astana announced on November 19, 2019, an order for 30 737 MAX 8 jets destined for the airline’s brand-new low-cost subsidiary FlyArystan. Signed as a letter of intent (LoI), the order is valued $3.6 billion at list prices.
Back in November 2018, the flag carrier of Kazakhstan, Air Astana, announced that it will be launching a budget airline (the first LCC in the country) in hopes to better compete in the growing low-cost segment. The new Almaty-based carrier called FlyArystan commenced operations on May 1, 2019, and has so far seen strong ticket sales, “exceeding all expectations”, according to the parent company.
Boeing states that Air Astana’s new 737 MAX 8s will serve as the “backbone” of the new low-cost carrier. FlyArystan currently flies three Airbus A320-200s and has previously revealed plans to expand its fleet to 15 aircraft by 2022. Its parent company, Air Astana, which began operations in May 2002, operates a fleet of 35 aircraft, consisting of Boeing 757s and 767s, Airbus A320 family planes (A320s and A321s in both ceo and neo versions), as well as Embraer 190 and E190-E2 jets.
President and CEO of Air Astana Peter Foster has expressed confidence in the 737 MAX: "Air Astana has had a strong relationship with Boeing ever since the airline started flying in 2002 with a pair of 737NGs. Today we operate both 757s and 767s and we believe that the MAX will provide a solid platform for the growth of FlyArystan throughout our region, once the aircraft has successfully returned to service.”
Air Astana’s order follows SunExpress’ deal announced the day before, on November 18, 2019. The Turkish leisure carrier – a subsidiary of Turkish Airlines and Lufthansa (LHAB) (LHA) – stated it is exercising options for an extra 10 737 MAX 8 jets, in addition to a previous order for 32 MAX aircraft. The agreement is valued at $1.2 billion at list prices and, together with Air Astana’s order, brings the total sum for the 737 MAXs to $4.8 billion.
"We have full confidence that Boeing will deliver us a safe, reliable, and efficient aircraft. However, it goes without saying that this requires the undisputed airworthiness of the model, granted by all relevant authorities," - said CEO of SunExpress Jens Bischof
SunExpress initially ordered 15 737 MAX 8 jets, including options for another 10 MAX 8s, back in 2014. It was part of a major purchase agreement for up to 50 Boeing aircraft, including 25 737-800NG airliners. Over the years, the Turkish carrier has proven to be a loyal customer for Boeing, steadily expanding its fleet of mostly Boeing 737s. The airline currently operates 65 737-800s as well as seven Airbus A330-200s.
Echoing Air Astana chief’s words, the CEO of SunExpress Jens Bischof stated: "We have a long standing, strong and trustful relationship with Boeing and thus we decided to turn our option into an order. We stand behind our strategic decision to phase the 737 MAX into our fleet for all of its economic and ecological advantages, mid- and long-term." According to Bischof, the company has “full confidence” in Boeing’s ability to resolve issues with the MAX and “deliver us a safe, reliable, and efficient aircraft”.
Not ashamed of the 737 MAX
Despite the ongoing MAX crisis and the grounding of the jet after the two fatal crashes in Indonesia and Ethiopia that resulted in the deaths of 346 people, Boeing is putting on a brave face in showcasing the new 737 MAX orders.
"We are honored and humbled by the trust that SunExpress has placed in our team at Boeing. They have been a wonderful partner over the years, demonstrating every day the efficiency and reliability of the Boeing 737 across their growing network," Stan Deal, president & CEO of Boeing Commercial Airplanes commented on the deal with the Turkish carrier.
On the agreement with Air Astana, Deal said: "Air Astana has become one of the leading airlines in Central Asia with its deep focus on safety, reliability, efficiency and customer service. At Boeing, we share those same values and are honored to expand our partnership with the 737 MAX.” According to him, “the efficiency and reliability built into the 737 MAX” will be “a great fit” for the airline’s subsidiary FlyArystan.
Springboard to securing 737 MAX orders
SunExpress’ deal is the first firm order for the 737 MAX since the grounding of the jet in March 2019. However, it is not the first order for the jet since the beginning of the MAX crisis per se. So far the biggest and most surprising order emerged at the Paris Air Show in June 2019, when the British Airways parent International Airlines Group (IAG) (IAG) announced its intention to acquire 200 MAX planes – a deal which, just as Air Astana’s, was signed as a letter of intent and has not yet been finalized.
Although the Dubai Airshow is now half way through (set to close on November 21, 2019), the 737 MAX orders continue to drop in and there is still time for more. This proves that the two major aviation industry events of the year have so far provided Boeing with the much needed momentum in new sales of the now infamous jet.
Another (undisclosed) airline has signed a firm order for 20 MAX jets (10 MAX 7s and 10 MAX 10s), according to a November 19, 2019, report by Reuters, citing a person familiar with the matter. If confirmed, it would mean the plane maker has already secured orders for 50 MAX jets, bringing the total value of the deals at $6 billion at list prices.
Earlier this week, on November 18, 2019, Bloomberg reported about talks being held between Indian low-cost carrier SpiceJet and Boeing on a possible deal for additional MAX jets to fit the airline’s fleet expansion plans. The order, as the newspaper noted, could be announced in the days to come.
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