Two More Key Lessors Go For Max

Farnborough Air Show » 2012
July 10, 2012, 5:35 PM

Boeing’s 737 MAX program picked up further market momentum yesterday as a pair of high-profile leasing companies–GECAS and ALAFCO–committed to a total of 120 airplanes worth almost $11 billion at list prices.

The larger of the two deals, inked by U.S. leasing giant GECAS, covered 75 of the future CFM International Leap 1B-powered narrowbodies, as well as 25 of the current single-aisle 737NGs.

Potentially worth some $9 billion at list prices, that contract calls for delivery of twenty-five 737NGs starting in 2015, followed by the 75 MAXs in 2018, GECAS chief executive Norman Liu revealed during a Farnborough International airshow press conference yesterday.

The second commitment, signed by Kuwaiti lessor ALAFCO, covered twenty 737 MAX 8s worth some $1.9 billion at list prices. ALAFCO chairman Ahmad Alzabin hesitated to talk about delivery schedules because, he said, negotiations over a firm order hadn’t reached that advanced stage.

Although the contract marked the first foray into the strategically vital Middle East market for the MAX program, Alzabin wouldn’t rule out placing the airplanes with airlines outside the region. ALAFCO ordered six 737-800s in March 2007 and took delivery of the last airplane in July 2011.

GECAS, meanwhile, already carries some 380 Boeing 737NGs in its product portfolio.

“A couple of years ago we placed an order for 40 new-gens [New Generation 737s], and basically we placed them all out,” said Liu. “So the 25 units that ship in 2015, 2016 and a little bit in 2017…hey, it’s because we’ve run all out.

“Right now we wish we had some more [NGs],” added Liu. “They’ve been great assets and we think we’ll have similar success with the MAX.” Liu expressed a desire to convert the commitment to a firm order for the airplanes as soon as possible. “We’re going to start working on a contract in the weeks ahead,” said Liu. “We’re very anxious to get it signed.”

The contract contains the “convertibility” for GECAS to opt for the larger MAX 9s, which, said Liu, will account for “a fair chunk” of the deliveries. MAX 8s, however, will account for the majority, he added.

The pair of deals brings to three the number of leasing companies with which Boeing has signed major contracts at the show. After signing a deal for 75 MAXs with California-based Air Lease Corp. on Monday, Boeing holds firm orders for 549 of the CFM Leap-1B-powered jets, while its commitment tally stands at more than 1,000.

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