Farnborough Air Show

Air Lease Signs For 75 Boeing 737 MAXs

 - July 9, 2012, 7:51 PM
Air Lease Corp. signed for 75 Boeing 737 MAXs yesterday at Farnborough 2012.

Air Lease Corp. (ALC) opened the sales race between the world’s big commercial airframe makers here yesterday with a firm order for 75 Boeing CFM Leap-1B-powered 737 MAXs. The contract, valued at $7.2 billion at list prices, calls for delivery, first, of sixty 737 MAX 8s, followed by deliveries of fifteen 737 MAX 9s, which would run through 2022.

The deal, which includes options for another 25 aircraft, represents the first order by a leasing company, although it converts a previously tentative commitment.

Still far behind Airbus in terms of orders for re-engined narrowbodies, Boeing hopes to close the gap here at the show this week. The rival A320neo has drawn firm orders for more than 1,400 aircraft, while the tally for the 737 MAX now stands at 549.

Calling the deal “a natural follow-on” for its existing commitment for 78 Boeing 737-800s, ALC chairman Steven Udvar-Hazy expressed satisfaction with the improvements Boeing has made to the MAX over the past few months after the ALC chairman issued a rather negative assessment of the airplane’s features during a finance conference in the U.S. in March.

“Boeing and CFM have really worked hard in the last six months to change the original design concept,” he said. “A number of things evolved. First of all, the [CFM Leap-1B] engine on the airplane is no longer the same engine that’s on the A320 family for the neo. This is an engine that’s been customized and optimized for the 737 MAX…its core, fan diameter and the whole installation is significantly better than we saw in the early part of this year.”

Udvar-Hazy also mentioned the aerodynamic changes, specifically in the wing-tip configuration, the aft part of the fuselage and the tail section, to reduce drag and improve fuel efficiency.

Also a customer for the A320neo, ALC now has covered the majority of the single-aisle market.

“Already, the 737-800 has five percent more seating capacity–maximum 189 versus 180 on the A320–so that translates into further unit cost advantages for our customers,” Udvar-Hazy continued.

The leasing industry icon noted that ALC conducted an “exhaustive analysis” of the MAX and determined that the CFM Leap-1B-powered narrowbody would yield a fuel efficiency improvement of between 12- and 13 percent compared with the 737-800. Boeing recently increased its estimated fuel-burn improvement quote from 11 percent to 13 percent.

“Once we went into the optimization of that engine, that’s when things really got better,” concluded Boeing Commercial Airplanes CEO Ray Conner.

The value of the engine order to CFM International is approximately $1.9 billion.