British Airways owner IAG buys 50 new 737 aircraft from Boeing

British Airways owner IAG has struck a deal with Boeing to buy a fleet of 50 new 737 Max planes, which will be delivered between 2023 and 2027.

The group said it had agreed to buy 25 of the 737 Max 8200 planes – first ordered by low-cost airline Ryanair – and another 25 of the 737 MAX 10 aircraft, as well as 100 options.

Although Boeing’s 737-8200 and 737-MAX 10 planes sell respectively for $120m and $130m, it is understood that IAG got a substantial discount on the list price.

“The addition of new Boeing 737s is an important part of IAG ́s shorthaul fleet renewal,” said IAG’s chief executive Luis Gallego.

“These latest generation aircraft are more fuel efficient than those they will replace and in line with our commitment to achieving net zero carbon emissions by 2050.”

Aviation analyst Sally Gethin said IAG’s decision could have an impact on relations with rival Airbus.

“On the one hand it is standard practice among many airlines to operate a mixed fleet,” she told City A.M. “However IAG has traditionally gone with Airbus for short-haul so it marks a turning point.”

IAG is no stranger when it comes to operating a mixed fleet but, according to Gethin, delays at Airbus could have played a part in the decision.

“There is a backlog to the A320 family of more than 5000 aircraft, with customers facing delays, whereas there is little to no delay in deliveries of the MAX,” she added.

“In fact the order for the MAX aircraft has been reduced from IAG’s original announcement pre-pandemic.”

Nevertheless, IAG’s order is a clear signal of support to the plane maker amid a turbulent time.

Boeing was forced at the end of April to halt production of its 777X jets after it posted steeper losses than initially anticipated.

In the first three months of 2022, the US manufacturer reported a net loss of $1.24bn.

“While the first quarter of 2022 brought new challenges for our world, industry and business, I am proud of our team and the steady progress we’re making toward our key commitments,” chief executive Dave Calhoun said.

The manufacturer’s issues also caused strained relations with some of its biggest clients.

Air Canada snubbed it in favour of Airbus when it orders 26 Airbus A321neo, while more recently Ryanair’s chief executive Michael O’Leary said the airline would revert to the second-hand market if Boeing’s management doesn’t step up.

“Boeing needs a management reboot in Seattle and either the existing management needs to up its game or they need to change the existing management,” O’Leary explained.

“We’re very happy to work with existing management but they need to bloody well improve on what they’ve been doing delivering to us over the last 12 months.”