May 27, 2005 in Business

Boeing lands deals for 60 737s, work on 787 jet

Michael Casey Associated Press
 

Fast fact

The Dreamliner

The 787 Dreamliner is a fuel-efficient aircraft set to go into production next year. The Japanese manufacturers will be responsible for making 35 percent of the aircraft.

JAKARTA, Indonesia – Indonesia’s top budget carrier Lion Air said it plans to buy 60 Boeing 737 aircraft at a cost of $3.9 billion as part of a bold plan to expand across Asia.

The deal was scheduled to be signed later Thursday during President Susilo Bambang Yudhoyono’s visit to the United States. With the purchase, Lion is hoping to grab a bigger share of the largely untapped domestic market and become a leading regional player alongside Malaysia’s AirAsia, a spokesman said.

“We want to make people fly. We want to become bigger and bigger,” said Lion Air Spokesman Hasyim Arsenal Al Habsi. “We need to serve passengers all over the region.”

Also Thursday, Boeing signed a deal with Japanese manufacturers for work on the new 787 jet. The largest agreement ever between Japan and the U.S. aircraft maker was reached last year by officials from Boeing, Mitsubishi Heavy Industries Ltd., Kawasaki Heavy Industries Ltd. and Fuji Heavy Industries Ltd.

Lion Air, the country’s second-largest carrier behind state-run Garuda Indonesia, announced last year that it was leasing Jakarta’s regional Halim Perdanakusma airport and would expand its routes across Asia.

In November, a Lion Air plane skidded off a runway in central Indonesia during heavy rain and split into two pieces, killing 26 people. It was the carrier’s first fatal crash and raised questions about the safety of the older aircraft it uses.

Nevertheless, Hasyim said Lion Air expects its passenger traffic to grow by as much as 30 percent this year, and it plans to begin serving routes to India, Australia, China, Japan and Hong Kong.

The company is buying a mix of Boeing 737-800s and 737-900s, and the first Boeing 737-800s should be delivered early 2006, Hasyim said. Specifics about the financing of the purchase will be released after the deal is signed, he said.

Hasyim said the company spent about six months reviewing a competing offer from Airbus – owned by European Aeronautic Defense & Space Co. and BAE Systems PLC – but decided to go with the American company because it was more familiar with Boeing planes.

Currently, the company has 38 aircraft in its fleet. Last year about 6 million people flew Lion Air.

Elsewhere, a company associated with Singapore Airlines Ltd. has finalized a deal for 20 Boeing 737 planes at a list price of $1.1 billion with an option to buy 20 more, Boeing said Thursday.

The delivery of the 737-800s to Singapore Aircraft Leasing Enterprise is expected to begin in 2006 and be completed by 2009, Boeing said in a statement.

The leasing company is jointly owned by Singapore Airlines Ltd., Germany’s WestLB Bank, Temasek Holdings and the Government of Singapore Investment Corp. Singapore Airlines itself is majority-owned by Temasek, the government’s investment arm.

The Japanese deal for the 787 Dreamliner – a fuel-efficient aircraft set to go into production next year – is a victory for the Japanese manufacturers, who are taking part in the jet’s development and design from the start and will be responsible for making 35 percent of the aircraft.

The Japanese companies, which have had a decades-long relationship with Boeing, had built about 21 percent of the Boeing 777 airframe and 15 percent of the 767.

The 787 deal marks the first time a company other than Boeing will be making the main wing components.

“The Japan-Boeing relationship is a really good example of the strength that comes from years of friendship and hard work, as well as dedication to excellence,” said Boeing Vice President Mike Bair, who leads the team developing the 787.

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