In two deals worth $14.4 billion at list prices, Jet Airways India announced it was purchasing 75 of Boeing’s 737 MAX single-aisle planes, and Vietnamese startup Bamboo Airways signed a commitment for 20 of Boeing’s twin-aisle 787-9 Dreamliners
Boeing isn’t waiting for next month’s Farnborough Air Show to unveil blockbuster aircraft deals.
The planemaker is poised to bolster its backlog with orders valued at $14.4 billion thanks to two transactions announced Monday. That’s a break from an industry practice of stockpiling sales for the biggest annual trade expo, which alternates between Paris and Farnborough, outside London.
Bamboo Airways, a Vietnamese startup, signed a commitment for 20 of Boeing’s twin-aisle 787-9 Dreamliners, the companies said in a statement. That’s a deal of about $5.6 billion at list prices, although customary discounts would bring the total down to about $2.9 billion based on estimates from aircraft valuation firm Avitas .
Earlier in the day, Jet Airways India announced it was purchasing 75 of Boeing’s 737 MAX single-aisle planes, a transaction valued at $8.8 billion based on list prices but closer to $3.9 billion based on Avitas estimates.
Jet, which didn’t detail which 737 variant it opted for, has historically gone with the smallest -8 model, though its Chairman Naresh Goyal said last month it has the flexibility to upscale to bigger versions. The carrier also has 10 787 widebody jetliners on order though the airline may not take the aircraft as it reviews its network.
The two deals underscore the tilt to the aerospace market in Asia, where airlines are stocking up on aircraft to serve a rapidly expanding middle class.
The orders also show that Boeing has access to a wider market in the region beyond China, where it could become an easy target if trade tensions with the U.S. escalate. Premier Li Keqiang said Monday that the Asian giant is willing to step up cooperation with Airbus.
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“While China is a big and important market, there are other markets in Asia that are in demand,” said Shukor Yusof, founder of aviation consulting firm Endau Analytics in Malaysia. “Southeast Asia is a gold mine.”
The latest purchase brings Jet’s backlog for the narrowbody plane to 225, the company said in a statement. The Mumbai-based airline had already placed two 75-plane orders, the most recent in April, with the first 737 MAX delivery arriving last week.
Jet and its Indian rivals are expanding fleets as demand for domestic flights surges. Rival SpiceJet has ordered more than 200 single-aisle aircraft from Boeing, while market leader IndiGo, operated by InterGlobe Aviation, is the biggest customer for Airbus’ competing A320neo plane.
Bamboo Airways made a deposit in mid-June to reserve the carbon-composite Dreamliners, which are tentatively scheduled for delivery in 2020 and 2021. The carrier plans to begin commercial service next year from its base in Hanoi, Vietnam, flying first within the country before expanding to markets such as China, South Korea and Japan.
New sales are also important contributors to Boeing’s cash flow. Customers typically make small advance deposits, followed by large “progress” payments about 18 to 24 months before an aircraft’s delivery as Boeing starts ordering equipment and cutting metal.
Such prepayments will generate about $5 billion in cash for the Chicago-based planemaker this year, up from $4.5 billion in 2017, David Strauss, an analyst with Barclays Capital, said in a research note. That would account for more than one-third of the $14 billion in free cash that Boeing is expected to produce this year.
Boeing had netted 306 commercial aircraft orders as of May 31, according to its website.