MIAMI — Lessor Avolon Aerospace announced that it had ordered six Boeing 787-9 Dreamliners and five Boeing 737 Max 9s in an order valued at more than $2 billion at present list prices on Monday. Avolon purchased 10 737 MAX 8s and 5 737 MAX 9s in 2012 at Farnborough, and now has brought its order book for MAX aircraft up to 20 frames.
Avolon had not placed any direct orders for the 787 before today’s announcement, but had been pursuing an ongoing sale and leaseback investment strategy for the 787. The orders today join Avolon’s managed, owned, and committed fleet of 207 aircraft with an average age of 2.4 years.
Joining Boeing Commercial Airplanes President and CEO Ray Conner at the announcement were John Higgins and Domhnal Slattery, President and CEO respectively of Avolon Aerospace.
The timing of the announcement was interesting, as it came just four hours after Airbus formally launched the A330neo, a re-engined version of its existing A330 wide-body platform. Airbus’ John Leahy confidently asserted that the larger A330-900neo variant would supersede the 787-9.
However, Mr. Slattery downplayed these concerns, falling back on the 787’s technological advances.
“We’re familiar with the A330neo, and the 787 is a different machine. It’s a technologically advanced aircraft, and a category killer… This is an airplane of the future… People sometimes ask, if I was starting a leasing company from scratch, what aircraft would I use? And I always tell them, the 787.”
He also highlighted the financial strength of the 787 program, noting, “We’re a leasing company, so we care about residual values, and the market feedback on the 787 is strong. The financing available for the 787-9 is excellent, and we are very bullish about how this aircraft is going to perform. The rentals this aircraft is commanding in the market today are a premium [over the A330].”
Mr. Higgins added that he views the 787-9 and A330neo as airplanes serving “distinct markets.”
“In order for one airplane [the 787] to be good, another [the A330neo] doesn’t have to be bad. The 787-9 has performance characteristics that the A330neo cannot match. [The 787] flies further with compelling economics, and it has extremely strong range over what the A330neo can offer… I think these are apples and oranges. [The 787-9] is a different machine.”
Mr. Higgins also provided tacit confirmation of Airchive’s analysis published earlier today that projected 787 improvements before the A330neo’s introduction in 2017, nothing that, “Each year, Boeing makes 1-2% incremental improvements on its airplanes, which adds up.”
Avolon has not yet selected an engine for either order, but engine selection will occur later this year. Deliveries for the 787-9 will begin in 2019, and while Avolon have both the 787-8 and now the 787-9 in their portfolio, Mr. Higgins cautions that the 787-10 is not yet in their plans.
“We’ve looked at the -10, and in fact we have rights within this deal to take some of the airplanes as 787-10s. It’s an airplane that we think will perform very well. But we’re a lessor, not an operator and so it’s not our place to define where the market will be quite yet.”
The 737 MAX order will also begin delivery in 2019, with pre-allocated delivery slots due to the conversion of purchase options from the previous order. Avolon was the second lessor to order the 737 MAX, and is bullish on demand for the type. “Airlines around the world are panting to get the MAX, and we’re anxious to get our hands on it,” said Mr. Slattery, who believes that the 737 MAX development is comfortably on schedule with plenty of slack.
The 737 MAX 9 has been outsold both by its smaller cousin the 737 MAX 8 and its rival the Airbus A321neo, but Avolon is upbeat on the aircraft’s potential.
Mr. Slattery commented that, “We [Avolon] study passenger demand very closely, in fact we are the only lessor that projects our own World Fleet Forecast. There is no question that there is a trend of up-gauging in narrowbodies, and we are following that trend closely. We believe that the  MAX 9 will be a very compelling aircraft as we move into the next decade.”