IAG, the parent of British Airways, Iberia, Aer Lingus, and Vueling, announced an order at the Paris Air Show for 200 Boeing 737 MAX aircraft. This is being trumpeted as a huge win for Boeing.
- It signals confidence in the plane that’s been grounded for months
- It puts Boeing ahead of Airbus in terms of total plane sales announced at the Paris Air Show
First, don’t believe the $24 billion price tag that’s being reported for this order. That just takes the ‘list price’ multiplied by the number of aircraft that have been ordered. But nobody pays list prices. Airlines usually pay about half of list price. $12 billion would still be a lot of money, however don’t believe that either.
- Boeing is desperate. They want to signal confidence and a win in the aircraft, and to get a major announce-able order while the plane is still grounded is huge for them. The discount they’d offer to do it would be bigger than usual.
- Willie Walsh, who used to run British Airways and now runs the IAG parent company, is a bottom-feeder. He sniffed around the Airbus A380 program before the end was announced for that aircraft, and was willing to take used aircraft, but no deal was forthcoming and we’re seeing A380s parked in the desert rather than meet Willie Walsh’s terms. He said they’re just too expensive to retrofit, so it wouldn’t have been enough to give him the planes for free.
- These aren’t real orders. There’s a “letter of intent” which doesn’t obligate IAG to much. There’s not even a firm outline of how many MAX 8s versus MAX 10s the order is supposed to be. There’s no announced plan for which airlines get how many of the aircraft (although low cost carrier LEVEL, and Aer Lingus, using these transatlantic makes some sense). The order could ultimately turn out to be real, because pricing is so good, but it could just as easily be a mirage.
- Despite finished aircraft backing up, and airlines potentially cancelling orders, this isn’t a deal for planes any time soon either. We shouldn’t expect to see the first delivery until 2023 — that’s if a firm deal comes out of this, and there’s no delay or deferral.
One Mile at a Time calls this profiting off of tragedy. I wouldn’t go that far. The 737 MAX fixes are potentially complete, and what’s left is convincing regulators that it’s safe to fly. It is highly likely that the aircraft will fly, and also that it will be safe — now that so many embarrassing stories have come out about key safety features turning out to be upsell items.
Wandering Aramean doesn’t think Boeing had “to pay IAG to take them off its hands.” And that technically might be true, this is a plane that will fly again and likely soon and has real operational value, to get BA to sign on to 200 planes and announce it at the Paris Air Show before regulators have agreed to Boeing’s plan for the aircraft, risking public backlash, would have certainly required doing a deal that would make Willie Walsh smile.