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February 14, 2012 in News, Business
Boeing lands largest-ever commercial order
NEW YORK — Boeing has locked in its biggest order ever with a little-known airline halfway around the world.
The Chicago airplane manufacturer said Tuesday that it has finalized an order from Indonesian carrier Lion Air for 230 planes — worth a combined $22.4 billion. The deal is the largest commercial airplane order ever for Boeing Co. by both dollar value and number of airplanes. Lion Air also has the rights to buy 150 more.
The order includes 201 of Boeing’s redesigned 737, which it calls the Max, and 29 extended range 737-900s. Lion Air plans to pay for the planes over 12 years with bank financing. A Boeing spokeswoman did not immediately return an email seeking more details.
Until the deal was confirmed, Boeing’s biggest firm order was from Southwest Airlines Co. for 208 planes valued at $19 billion at list prices. Airlines commonly get discounts. Southwest will be the first customer to get the 737 Max, which is still in testing. It’s scheduled for delivery in 2017.
Securing the Lion Air order is a big win for Boeing because it was considered something of a long shot when it was first announced in November. The order will more than quadruple the current fleet at Lion Air, who has had a long history of safety concerns.
In 2004, a Lion Air MD-82 crash-landed, killing 25 people. There have also been a number of other incidents, including hard landings and overshooting runways, some causing injuries and damage to planes. In 2007 the European Union banned all of Indonesia’s 50 airlines from landing on its runways for two years. And since September, three Lion Air pilots have been arrested after testing positive for illegal drugs. The arrests raised fresh concerns over the safety of aviation in Indonesia, where it is a main mode of travel across the nation of 17,000 islands.
Dozens of airlines have emerged in Indonesia since it deregulated its aviation industry in the 1990s, and the market is growing rapidly. Boeing thinks that demand in the Asia-Pacific region will grow more than in any other part of the world over the next two decades.
Lion Air was started by a travel agent and his brother, who pooled $850,000 to launch the carrier in 1999.
It is Indonesia’s largest private airline but is small compared to most U.S. carriers. With a fleet of 76 planes, it’s about double the size of Spirit Airlines or Allegiant Travel Co., according to Airfleets.net. But it’s just one-tenth the size of United Continental, the world’s largest airline company. Lion Air is also relatively small compared with other Asian carriers. Singapore Airlines has a fleet of about 120 planes, while Japan’s All Nippon Airways, the first customer for Boeing’s 787 Dreamliner, has a fleet of 174.
Tuesday’s order also adds to Boeing’s recent momentum in its competition against European rival Airbus. Lion already operates an all-Boeing fleet.
Middle East carrier Emirates ordered $18 billion worth of long-range Boeing 777s in November. Southwest’s order for 737s was placed in December.
Those orders followed a significant win for Airbus. In July American Airlines said it will order 200 planes from Boeing, including 100 of the Max model. But for the first time American also ordered planes from Airbus — 260 A320s, the Airbus rival to the 737. Because American and parent AMR Corp. are operating under bankruptcy protection, a judge will decide whether the airline can go ahead with that large order.
The 737 Max is Boeing’s answer to the Airbus 320neo, another plane with new engines that are designed to boost fuel efficiency. That plane is due in service by late 2015.
Boeing has been building versions of the short- and medium-range 737 since the late 1960s. It has sold about 7,000 of them, making it the company’s most popular plane ever. Workers on Boeing’s assembly line in Renton, Wash., make about one every day. The company plans to boost production by roughly one-third in 2014 to meet new orders.
Boeing shares rose 17 cents to $75.02 in morning trading.
© Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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westerly on February 14 at 5:54 p.m.
Where the jobs are…….
RedCedar on February 14 at 6:41 p.m.
Kind of sticks in your craw, doesn’t it?
Mayocynic1 on February 14 at 7:32 p.m.
Consequences of a very bad governor who refused incentives necessary for a big company like Boeing. And the union damage didn’t help.
Companies are in business to make money …not please the various unions. Washington St wasn’t loyal to Boeing so I’m sure Boeing decided to not be loyal to Washington St.
Sure a large factory component was left behind but the Chicago World Headquarters was a big loss to Washington. Take heed.
RedCedar on February 14 at 9:00 p.m.
The truth is, the economic loss to Washington wasn’t really all that great. I don’t know what the drop in B&O tax amounted to. I wouldn’t be surprised if it was exempt from that, like it’s exempt from sales tax. Direct union employment has no doubt dropped but that would have to happen no matter where the main office was. The constellation of little job shops scattered around the Seattle area making parts for Boeing wasn’t affected by the move, and many of them are making parts for Airbus as well.
On the financial bottom line, losing the Boeing headquarters was really a non-event. But as someone who was raised in the Boeing family, that opening line still sticks in my craw. I’m glad they got a big airplane order. Most of that money will end up in the payroll to American workers, direct, contractors, and vendors, and that’s what really matters.
PROFINTOX on February 14 at 11:24 p.m.
Mayo — dude, way to turn lemonade back into lemons. This is really good news but somehow you manage to make it sound really sucky. Red is correct on this one — the move of corporate headquarters did not have much impact on Washington State except for as noted, being a “dis” as our generation often says. The part that makes the real difference is the design and manufacturing operations and the various entities tied to those operations in terms of supplying, servicing etc… If we lost those operations, then THAT would truly hurt.
therailroader on February 15 at 8:35 a.m.
Hopefully, this positive news turns into more jobs for WA state residents. Hopefully Boeing Managment found out what a disaster it has been for having the “world” build its new planes. Time to bring the jobs back home & diversify among the states & pay your fair share of corporate taxes. Businesses are run to make money, however, a social responsbility also exists for the employees they hire (not just the stockholders).
Mark_Richard on February 15 at 8:49 a.m.
I think you can begin to see that our goals and efforts to secure some part of Boeing’s business by continuing to work on infrastructure and zoning issues is important to the community and a valid excercise.