Jan. 10 (Bloomberg) -- Romanian discount carrier Blue Air-Transport Aerian SA said it scrapped an order for five Boeing Co. 737 jets with a list price of $462 million after sister company and investor Romstrade encountered financial problems.
The contracts, placed in 2008, were for two 737-800s and three 737-900ERs for delivery in 2015 and 2016, Blue Air Deputy General Manager Adrian Ionascu told Bloomberg News.
“The decision was based on the current financial situation of Romstrade, part of the same group of companies as Blue Air, and on Blue Air’s incapacity to pay liabilities stipulated in the contract with Boeing,” Ionascu said in an e-mail.
A Romanian court in the southern town of Giurgiu declared road builder Romstrade insolvent last month, according to the court’s website. Both companies are owned by Nelu Iordache, who has been detained in a probe into the whereabouts of European Union funds, Blue Air Marketing Director Mirela Secan said.
Blue Air needs modern planes to reduce fuel burn and help it contend with Budapest-based discount rival Wizz Air Ltd., which has the “scale and ability to compete very aggressively,” said John Strickland, director of JLS Consulting in London.
The carrier’s fleet currently consists of nine Boeing 737-300s, -400s and -500s, a series that debuted in 1984, compared with service entry in 1998 for the -800 and 2007 for the -900ER.
Blue Air’s cancellation was reflected in Boeing order data for December, published last week. The decision won’t impact flights, which are operating to schedule, Ionascu said.
To contact the reporters on this story: Roxana Zega in London at email@example.com