DALLAS — Aircraft leasing company Avolon has announced that it will purchase 40 Boeing 737 MAX planes in a deal worth over US$4bn at list prices. The planes are set to be delivered between 2027 and 2030
The announcement is a boost for Boeing, which is dealing with fresh delivery issues, and comes after the company’s announcement that it plans to increase 737 MAX production later this year. This new commitment will increase Avolon’s owned, managed, and committed fleet to 870 aircraft.
Before the deal, Avolon had committed to buying 252 aircraft, with 184 being Airbus’s A320neo family of jets. According to Avolon CEO, Andy Cronin, Airbus has contacted a “wide number of customers” about the production schedule impacts for next year, as industry-wide supply chain issues persist.
Confidence Over Boeing
Despite Boeing’s manufacturing issues, Cronin expressed confidence in the fundamentals of the MAX program and Boeing’s ability to deliver the aircraft.
The new manufacturing issue at Boeing will delay some of the company’s aircraft deliveries, but Cronin does not expect the delay to require compensation or to fundamentally impact Avolon’s business. In Q1 2023, Avolon delivered $599 million of lease revenue and a net income of $56 million, citing high demand for aircraft and leasing activity amid a shortage of jets.
“This commitment with Boeing underlines our confidence in the positive momentum in the aviation market. With strong demand for our new technology order book and delivery slots at a premium, it strengthens and extends our delivery profile with Boeing.”Avolon Chief Executive Andy Cronin
Overall, the deal will support Avolon’s airline customers in future growth while reducing carbon emissions. All 737 MAX planes are powered by the CFM International Leap-1B engine.
Avolon expects to obtain shareholder approval from its 70%-owner Bohai Leasing by the end of May. The purchase also expands Avolon’s delivery profile with Boeing, as the company was responsible for delivering the first MAX to its customer in 2017.
Feature Image: Avolon