July 9 (Bloomberg) -- Boeing Co. opened the Farnborough air show with a $7.2 billion order from Steven Udvar-Hazy’s Air Lease Corp., the first purchase by a lessor for the planemaker’s new, fuel-efficient 737 MAX.
The 75-plane firm order is for 60 of the Max 8 version and 15 of the Max 9, Chicago-based Boeing said today in a statement at the show outside London. Boeing’s recent tweaks to the Max, including winglets to help save fuel, helped win over Air Lease, Udvar-Hazy said.
“The airplane we looked at last year and the first few months of this year is now a totally different plane,” Udvar-Hazy said in an interview.
Boeing is seeking to replicate Airbus SAS’s success with its A320neo at last year’s show in Paris, where the French manufacturer dominated the order book. That rout unfolded as Boeing pondered its next single-aisle move and then rushed to unveil the Max before directors had signed off on building it.
The U.S. manufacturer is headed toward more orders for the Max at the show, with General Electric Co.’s jet-leasing unit poised to purchase 100 737s, two people with knowledge of the transaction said.
GE Capital Aviation Services’ purchase includes 75 737 Max planes, said the people, who asked not to be identified because they aren’t authorized to discuss the deal. The list value would be $9.25 billion based on prices for the 737-800, the current jet’s most-popular model, and its Max equivalent. GE and Boeing spokesmen declined to comment.
The Max has a 13 percent fuel-burn improvement over current models, according to Boeing, making it attractive to airlines in an industry whose largest expense typically is jet kerosene. It is scheduled for a 2017 commercial debut and has amassed more than 1,000 orders and commitments.
Air Lease’s order includes reconfirmation rights for 25 additional aircraft, Udvar-Hazy said.
Boeing rose 0.5 percent to $74.03 at the close in New York., while Air Lease fell 0.4 percent to $19.15.
In reaching an agreement with Air Lease’s chief executive officer, Boeing is renewing longstanding ties to the man known as the godfather of the leasing industry.
Udvar-Hazy founded International Lease Finance Corp. in 1973 and built it into the world’s biggest such lessor before selling to American International Group Inc. in 1990, making him a billionaire. He left in 2010 and founded Air Lease months later. By his count, he has bought about 2,100 jets in his career.
Lessors are attractive buyers because they place jets with multiple airlines, broadening the base for the Max. While lessors represent about 35 percent of the installed airliner base, they account for only about 20 percent of planemakers’ current backlog, said Yan Derocles, an Oddo Securities analyst in Paris.
The Max will be powered exclusively by new engines from CFM International, a joint venture between Fairfield, Connecticut-based GE and Paris-based Safran SA.
Grupo Aeromexico SAB is close to the purchase of about 70 mainly single-aisle aircraft, three people familiar with the talks said, though that deal may not be completed during this year’s Farnborough show.
Mexico’s largest airline is considering A320neos and some A350 wide-body jets, as well as the Max and the 787-9 Dreamliner, said one of the people, who asked not to be identified because the talks are private. Boeing has the upper hand after its commercial airplanes chief, Ray Conner, sent a sales team to Mexico to secure the order, two of the people said.
To contact the reporter on this story: Thomas Black in Farnborough, England, at firstname.lastname@example.org