Boeing close to major order for dozens of 737 MAX jets - sources
Reuters' exclusive reveals proposed deal could involve 130 new orders
SEATTLE - Boeing Co is close to a deal to sell dozens of its 737 MAX 7 jets to Southwest Airlines Co, in potentially the company's largest 737 MAX order since the aircraft's safety ban was lifted, people familiar with the matter said on Wednesday.
If confirmed, the deal would head off a partial defection to Airbus SE by one of Boeing's largest customers and provide Boeing much-needed support after the nearly two-year grounding of the 737 MAX family, following fatal crashes in 2018 and 2019.
The order would include dozens of firm orders and potentially significant options, the sources said.
UNITED AIRLINES ORDERS MORE BOEING 737 MAX PLANES
U.S. carrier Southwest said it does not comment on fleet decisions and has nothing to announce. Boeing declined comment.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BA | THE BOEING CO. | 166.81 | +2.48 | +1.51% |
| LUV | SOUTHWEST AIRLINES CO. | 27.25 | -2.04 | -6.96% |
The proposed deal, which one of the sources said could potentially involve 130 firm orders plus roughly 170 options, follows speculation of a faceoff between the smallest member of Boeing's MAX family and the A220 from Airbus.
Another person cautioned the number of firm orders may fall below three digits, which would still be significant for the MAX given its high-profile problems.
An order for 130 of the jets would be worth $13 billion at list prices, though such jets usually sell for less than half their official value of about $100 million with typical market discounts, according to aircraft industry sources.
737 MAX'S RETURN BENEFITS THIS COMPANY EVEN MORE THAN BOEING
The exact terms of any deal and the timing of a possible announcement were not clear.
Boeing shares gained 6.4% to close at $245.34 on Wednesday. Southwest shares dipped 0.7% to close at $58.51.
The potential Southwest deal comes after Alaska Airlines agreed in December to buy 23 737 MAX 9 jets following a lifeline order from European budget airline Ryanair for 75 of the narrowbodies.
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Southwest Chief Executive Gary Kelly said in November that the company wanted to make a decision soon about refreshing its aging 737-700 jets with 143 seats and was debating between the Boeing 737 MAX-7, which has yet to come out and be certified, or the A220, which would mean a shift away from its all-Boeing fleet for the first time.
Speaking at an Aero Club of Washington virtual luncheon on Wednesday, Kelly said Southwest remained in negotiations with Boeing and reiterated the advantages to having a single fleet type, while acknowledging that the A220 is "a great plane."
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Any deal is not meant to increase Southwest's overall fleet size. It has parked dozens of planes while weathering the COVID-19 crisis.
March 10 marks the second anniversary of a MAX crash on Ethiopian Airlines, five months after a similar disaster on a Lion Air flight. Altogether, 346 people died.