IAG shows confidence in 737 Max with purchase commitment

International Airlines Group (IAG) has signed a letter of
intent to purchase 200 Boeing 737 Max jets, a boost for Boeing and its
beleaguered single-aisle aircraft, which has been grounded by international
regulators since March. 

IAG is the parent of British Airways, Iberia, Air Lingus, Veuling
and Level. 

The 200 aircraft have a list-price value of $24 billion. However,
IAG’s commitment is not firm.

The airline group said it would split the order between the
737 Max 8, which is the variant that went down in recent Lion Air and Ethiopian
Airlines crashes, and the larger 737 Max 10, which has yet to launch. 

Boeing is currently working to get the 737 Max recertified
through a fix of its automated flight-control software system. That system is
believed to have played a role in both crashes, which killed a total of 346

In a statement, IAG CEO Willie Walsh said the Max would make
a great addition to IAG’s short-haul fleet.

“We have every confidence in Boeing and expect that the
aircraft will make a successful return to service in the coming months, having
received approval from the regulators,” Walsh said. 

The order would be a major departure for IAG, which today
has an almost exclusively Airbus narrowbody fleet. 

The IAG announcement is a publicity coup for Boeing, which
booked only 10 orders during the first day of the highly competitive Paris Air
Show on Monday, according to Wolfe Research analyst Hunter Keay. By comparison,
Airbus announced 112 orders and commitments on Monday.

Despite the grounding, Boeing has a backlog of approximately
4,400 orders for the 737 Max. That figure doesn’t include the potential IAG
purchases, since a final agreement hasn’t been reached on the 200 aircraft. 

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