Boeing Signs Record $22.4 Billion Lion Air Order for 737s

Boeing Co. (BA) signed a 230-aircraft order worth $22.4 billion at list prices from Indonesian budget carrier PT Lion Mentari Airlines, setting a record for the planemaker.

The accord today at the Singapore Airshow, which solidifies a provisional agreement last year, includes 201 orders for the in-development 737 MAX and 29 for the extended range 737-900. Airbus SAS separately announced a contract for 35 of its planned A320neo aircraft from Kuwait-based Aviation Lease & Finance Co.

The two planemakers are working on more fuel-efficient versions of their single-aisle aircraft as they compete for customers in a segment accounting for about 60 percent of the global fleet. The companies’ stranglehold on the market is also under threat as Commercial Aircraft Corp. of China and Bombardier Inc. (BBD/B) develop their first planes of that size.

Chinese planemaker Comac today announced orders for 20 of its C919 plane from BOC Aviation Pte, the leasing unit of Bank of China Ltd. The aircraft is the nation’s first large passenger jet.

The Lion Air order, which also includes 150 options, is Boeing’s largest in terms of dollar value and aircraft numbers. It surpasses a Southwest Airlines Co. deal for 208 737s signed in December and comes about a month after a European record order for 122 737s from Norwegian Air Shuttle AS. Airlines usually receive discounts for large orders.

Lion Air Funding

Lion Air intends to use export-credit agency financing, bank loans and sale-and-leaseback deals to help pay for the planes, said President Director Rusdi Kirana.

The carrier may also hold an initial public offering once its market share has reached 60 percent from 51 percent, he said. That could happen within the next two years, he said. The airline is able to wait as it is making money, Kirana said.

The Jakarta-based company expected to carry 27 million passengers last year, an increase of 30 percent, and it has forecast future growth of about 15 percent a year. It already operates or has orders for 178 of the existing versions of the 737, according to Boeing.

The 737 MAX aircraft, which is due to enter service in 2017, will pare fuel use and carbon emissions by as much as 12 percent compared with current single-aisle planes, according to the planemaker. It will use engines made by CFM International Inc., a venture between General Electric Co. (GE) and Safran SA. (SAF)

Airbus had 1,256 orders for A320neo family planes at the end of last year, according to its Website. The aircraft, which also features new engines, is due to enter service in 2016.

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net.

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.