PARIS – Aircraft leasing firm, Tibet Financial Leasing, announced a commitment for 20 737 MAX aircraft this morning at the 2017 Paris Air Show.
The order is split between the newly launched 737 MAX 10 variant, and the smaller 737 MAX 8. Boeing declined to provide a breakdown of orders between the two variants. The order is worth just over $2.5 billion at current list prices.
“Our intention to purchase the 737 MAX reflects the strong customer feedback we have received,” said Wang Yanjun, President of Tibet Financial Leasing. “It is natural to start our aviation leasing business with the fastest-selling airplane in Boeing history. We are confident that our customers will be satisfied with the efficiency, economics, flexibility, and passenger comfort that the 737 MAX promises to deliver.”
— Boeing Airplanes (@BoeingAirplanes) June 19, 2017
“We are delighted to welcome Tibet Financial Leasing as a new Boeing customer and a launch customer of the newest 737 MAX family member,” added Ihssane Mounir, senior vice president, Global Sales, and Marketing, Boeing Commercial Airplanes. “As leasing companies are playing an increasingly important role in the world’s aviation sector, we are proud to support Tibet Financial Leasing’s takeoff and future expansion.”
Tibet Financial Leasing is a recently established lessor in China, which is trying to use heavy state investment in the Tibet Autonomous Region to boost economic growth.
Formed in 2015, Tibet Financial Leasing currently has equity capital of RMB 3 billion (or US$440 million), more than enough to support initial deposits for these 20 737 MAX aircraft and perhaps up to an additional 20-30 narrowbodies or 10-15 smaller widebodies (787s or A330neos).
The 737 MAX feels the love from Chinese lessors
Already on Monday afternoon of PAS 2017, Chinese lessors have been established as major customers for the 737 MAX. Earlier today, the aircraft leasing arm of state-owned China Development Bank (CDB Aviation) placed an order for 48 new 737 MAX jets (and along with 6 conversions from a previous order, 10 total 737 MAX 10s).
Now, Tibet Financial Leasing has committed to the 737 MAX 10, and China Aircraft Leasing Group (CALC) has announced prior to the show that it had ordered 50 737 MAX jets, the breakdown of which will almost certainly be revealed at PAS.
The purchases themselves from China are not surprising: it is one of the world’s fastest growing aviation markets, and the MAX 10 is a good fit for its crowded airspace. The question is why they chose to announce them at PAS.
Typically, Chinese aircraft purchases are tied to state visits to or by the Chinese government, though this norm has diminished in recent years. Still, with Chinese lessors ordering more than 100 planes at PAS, it is worth exploring why.
One possible explanation is that the Chinese government is attempting to curry favor with President Donald Trump via the proxy of Boeing on trade matters. With the President facing sharp and aggressive opposition from Democrats in the U.S. and being the subject of an investigation, he may be incentivized to turn his eye to trade issues where his policies are economically senseless but politically popular.
China buying Boeing jets is a great way to send political signals that would warn the President away from taking drastic action against that trading relationship.