Boeing wins AerCap order for 737 MAX jets worth $10.7 billion

[June 16, 2015]  By Tim Hepher

PARIS (Reuters) - Boeing Co won an order for 100 737 MAX 8 passenger jets from Dutch aircraft leasing company AerCap at the Paris air show on Tuesday, in a deal worth $10.7 billion at list prices.

The news confirmed a Reuters report that Boeing was close to clinching the long-sought deal.

"This is something we have been working on for a long time," AerCap Chief Executive Aengus Kelly said. "It is as important a transaction for AerCap as it is for Boeing."

AerCap inherited the negotiations from U.S. leasing company ILFC, which it bought last year. ILFC had refused to join a wave of leasing company orders for the revamped 737 MAX, saying the terms must be right, a position later echoed by AerCap.

Last week, AerCap Chief Executive Aengus Kelly said the June 15-21 air show was likely to produce fewer orders this year than in the past, presenting an ideal time to negotiate with planemakers for favorable deals.
 

"We know there is demand out there for this aircraft type," Kelly said. "We are very comfortable with the supply we see coming down the pipe from the manufacturers. We will see what happens with rate 60."

Boeing and Airbus are exploring increases in production of their most popular single-aisle models to about 60 aircraft a month by the end of the decade on top of existing plans to reach 50-52 a month in 2017-18.

Some suppliers have expressed caution over already steep production increases, however.

Boeing Commercial Airplanes Chief Executive Ray Conner said the company would be cautious about taking a decision to raise production towards 60 a month.

"Our focus right now is to go to 52 (in 2018)," he told reporters after signing the AerCap deal. "We consult with the leasing companies because they have a good sense of where the market is. The worst thing for any of us is to oversupply; our intention is to not oversupply.

"We are going to be very prudent in how we approach any rates above 52. It feels like the demand is higher than that, but that can be short-lived. So we are … going to see how things progress."

(Editing by James Regan)

[© 2015 Thomson Reuters. All rights reserved.]

Copyright 2015 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.