Aerospace & Defense

Boeing Scores Order for 200 MAX Jets as Airbus, GE Make Gains

The first day of this year’s Paris Air Show was not a particularly good one for The Boeing Co. (NYSE: BA). The company spent half of Monday apologizing for its missteps with the 737 MAX and the other half talking about its new 20-year outlook. Tuesday finally produced some announced sales for the Chicago-based giant.

By far Boeing’s most important commitment is a letter of intent from the International Airlines Group (IAG), the parent of British Airways, Iberia, Aer Lingus, Vueling, and Level, for 200 MAX family jets valued at some $24 billion at list price. When (or, if) the deal is finalized, the order will break the Airbus monopoly among the IAG carriers . Boeing’s 787 and 777 twin-aisle planes are mainstays of IAG’s fleet, and the firm earlier this year placed an order for 18 of the new 777X twin-aisle jets for British Airways.

It’s worth pointing out here that orders for new airplanes can be put into one of two main buckets: firm orders or commitments. With a firm order, the customer typically pays some portion of the price at first, then shells out more when the plane hits the assembly line and finally the balance when aircraft is delivered. Commitments bring no cash and are typically categorized either as a letter of intent or a memorandum of understanding (MOU), but aircraft builders can be a bit vague about just how much of a commitment a buyer has made. Orders don’t go into a company’s order book until they are firm.

Korean Air has signed a commitment to purchase 10 new Boeing 787-9s and 10 787-10s at a total list price of around $6.3 billion. The airline will also lease an additional 10 787-10s from Air Lease Corp. (NYSE: AL). The Korean Air order will be added to Boeing’s backlog once it’s finalized.

Air Lease, which on Monday signed a letter of intent to purchase 100 new airplanes from Boeing’s arch-rival Airbus, announced a commitment to purchase five new 787-9s in an order valued at $1.5 billion.

According to the Airfinance Journal, Airbus took orders for 12 new planes on Monday and signed other commitments for 100 new planes. Boeing posted no new orders or other commitments on Monday.

Saudi Arabian Airlines has placed a firm order for 30 new Airbus A320neo aircraft and options on another 35. If all options are exercised, the order would be worth about $6.6 billion at list prices.

Airbus signed a memorandum of understanding (MOU) with Philippines-based low-cost carrier Cebu Airlines for 16 A330neo aircraft, 10 A321XLRs, and five new A320neo planes. If finalized, the order would be worth around $6 billion.

The third deal Airbus announced Tuesday was an upgrade to a prior order for 253 A320neos to the larger A321neo. The price list difference is around $19 million per plane.

IAG placed a firm order for 14 A321XLRs that will go to Iberia (8 planes) and Aer Lingus (6 planes).

U.S. carrier Delta Air Lines Co. (NYSE: DAL) placed an order for five of Airbus’s A220-100s, formerly the Bombardier CS100. Delta was the U.S. launch customer for the plane and has previously placed orders for 90 of the A220-100s and A220-300s. The A220-300, which will be built in a new Airbus plant in Mobile, Alabama, has not yet been delivered to customers.

One thing to watch is the number of orders and other commitments Airbus takes for its A321XLR, the plane the company has positioned as its midsize competitor to the yet-to-be-announced Boeing new midsize airplane (NMA). As of late-morning Tuesday, Airbus has a total of 28 orders and commitments for the new plane. That is a relatively modest showing for a plane that the company launched at this show. That result could mean that the market for the midsize plane is more in line with Airbus’s lower estimate than with Boeing’s higher one of around 4,000. IAG’s order for 14 Airbus A321XLRs is not particularly good news for Boeing’s putative NMA.

Another winner in Paris so far this week is General Electric Co. (NYSE: GE). The company’s aviation segment closed a $588 million dollar sale of the company’s LEAP-1A engines to the aircraft finance division of Macquarie Group. The LEAP-1A is used on the Airbus A320neo and A321neo and is built by CFM International, a joint venture between GE and French firm Safran.

Dublin, Ireland-based aircraft lessor Avolon placed an order for 140 LEAP-1A engines at a list price of $2.06 billion. The engines will be used to power 70 Airbus A320neo aircraft in addition to the 80 engines that Avolon already uses to power 40 A320neos.

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