PARIS – Kuwaiti leasing firm ALAFCO Aviation Lease and Finance Company announced a commitment to order 20 737 MAX 8 aircraft at the 2017 Paris Air Show on Monday.
ALAFCO previously had 20 737 MAX 8 jets on order from October 2012, and today’s commitment grows that backlog to 40 MAX frames in all. It was also the first Middle Eastern customer for the Boeing 787 Dreamliner.
The order is valued at $2.2 billion at current list prices.
“As a lessor, we are committed to provide our global customer base with technologically-advanced aircraft,” said Ahmad Alzabin, chief executive officer and vice-chairman, ALAFCO. “Fuel efficiency, operational reliability and efficiency are key factors for our airline customers and the 737 MAX will help us meet those demands in the single-aisle market.”
“ALAFCO’s commitment to purchase 20 more 737 MAXs is an excellent endorsement of the aircraft which is already the fastest-selling airplane in Boeing history,” said Ihssane Mounir, senior vice president, Global Sales and Marketing, Boeing Commercial Airplanes. “We are very pleased with this opportunity to help expand ALAFCO’s single-aisle portfolio with the 737 MAX and look forward to strengthening and growing this partnership even further.”
ALAFCO has airline customers mostly throughout the Muslim world, including carriers in the Middle East, Southeast Asia, and Europe. However, its home country’s flag carrier, Kuwait Airways, already has its future narrow-body needs met with 15 Airbus A320neo aircraft on order.
737 MAX Gets Boost in the Middle East
Today’s order by ALAFCO gives the 737 MAX program a much-needed boost in the Middle East. To date, the three largest buyers of the 737 MAX in the region are Oman Air with 20 aircraft on order, FlyDubai with 75 aircraft on order, and Qatar Airways with as many as 60 aircraft on order.
Qatar Airways is not expected to directly operate the 737 MAX. Instead, the aircraft will likely be operated by one of Qatar’s numerous partner airlines.
With the exception of FlyDubai, most of the region’s airline powers have opted for the A320neo over the 737MAX. Etihad Airways has 36 A320neo aircraft on order and Qatar Airways has 46 A320neo family aircraft on order.
For Boeing to better compete with Airbus in the Middle East, it will need to target airlines who have yet to order next generation narrow-body planes. One potential customer is Saudi Arabian flag carrier Saudia, which currently operates 57 Airbus A320 aircraft.
Having warmed relations with the United States after President Trump’s recent visit to the Kingdom, Saudia may buy the 737 MAX at this year’s Dubai Airshow. Like China, Saudia prefers to split its orders between Airbus and Boeing for political reasons.
Another airline for Boeing to target is Emirates Airlines. Although the mega-carrier operates wide-body aircraft exclusively, longtime President Sir Tim Clark floated the idea of operating narrow-body aircraft to CNN’s Richard Quest earlier this year. Clark said the airline would decide in the next 18 months on a narrow-body order.
Given Emirates’ focus on volume above all else and slot constraints at its Dubai hub, if it elects to purchase the 737 MAX, it could opt for the 737 MAX 10 variant launched Monday morning by Boeing at PAS 2017. But our current view is that Emirates is still unlikely to buy narrowbody aircraft despite Clark’s comments.