Boeing (NYSE:BA) has announced that it has finalized a firm order with Indonesian airlines, Lion Air, for the delivery of 230 aircraft. This is a big boost for Boeing which has already zeroed in on commercial aviation in emerging markets as the next big growth driver. Boeing principally competes with other global jet manufacturers like Lockheed Martin (NYSE:LMT), Northrop Grumman (NYSE:NOC) and Airbus (EPA:EAD).
The order placed by the Indonesian airline is for 201 737 MAXs and 29 Next-Generation 737-900ERs (extended range). This order will also give Lion Air the right to purchase an additional 150 planes. The order, which is valued at $22.4 B by list prices is the largest commercial airplane order ever in Boeing’s history by both dollar value and total number of airplanes.
The initial announcement of the Lion Air’s interest was made in November last year during U.S. President Barack Obama’s visit to Asia Pacific. The European based Airbus had then alleged that United States was applying political pressure to secure the deal on behalf of Boeing.
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Lion Air is the biggest Indonesian airline in terms of passenger volume and currently operates or has on order a total of 178 Next-Generation 737s. It feels that 737 with its fuel efficiency had enabled more people to fly, and this trend will get gain momentum with 737 MAX which is expected to deliver higher efficiency, reliability and passenger comfort in the single-aisle market than existing aircraft. It incorporates the latest-technology CFM International LEAP-1B engines while building on the strengths of current generation 737’s. 737 MAX is expected to deliver a 10-12% fuel burn improvement over the currently operating fuel efficient single aisle aircraft.
737 MAX has currently orders and commitments for more than 1,000 airplanes from 15 customers and the Next-Generation 737 family has orders for more than 6,600 airplanes. Lion Air is also a global launch customer of 737 MAX 9, a variant of Boeing’s best selling 737 – 900ER family.