Gulf carrier Qatar Airways and Boeing said that the former signed a letter of intent for up to 60 narrowbody 737 MAX 8 jets worth $6.9 billion and ordered 40 Boeing Co widebody jets valued at $11.7 billion.
In a year when sales have slowed sharply, and amid tough price competition with European rival Airbus, the agreement for up to 100 jetliners potentially worth $18.6 billion helps fill out Boeing’s order book.
After Qatar Airways refused to accept three of Airbus’ competing A320 aircraft earlier this year, the deal marked a key commitment by Qatar Airways to Boeing’s new 737 MAX jetliner. Qatar has not ordered 737s previously.
Boeing was further pressed to build a new jet slightly larger than the 737 to fill a gap in Boeing’s product line by airline Chief Executive Officer Akbar Al Baker.
Asked in an interview when he expected to hear more about that proposed plane, Al Baker said: “Yesterday!”
Boeing continues to evaluate such a plane and talk with customers, said Ray Conner, CEO of Boeing Commercial Airplanes, in the same interview.
“I think we have a pretty good idea today as to what our customers would like to see with respect to seat count, range capabilities,” Conner said, adding that Boeing understands how quickly customers want the plane.
“Now it’s a matter of us going back and doing our homework and figuring out how do we put all of that together,” he said. “I can’t give you a real time frame on that, but we’re certainly working the heck out of it right now.”
Compared to an order for five Boeing 777-300ER aircraft worth $1.7 billion that the carrier had been expected to place during Britain’s Farnborough Airshow in July, the deal for 30 of Boeing’s 787-9 Dreamliners and 10 of its 777-300ER aircraft is significantly larger.
Sources familiar with the situation said that in an effort to speed up U.S. approval of its purchase of Boeing fighter jets, the announcement was postponed by Qatar.
If all of the 737 MAX jets are purchased, the orders announced on Friday are worth $11.7 billion at list prices, with an additional list value of $6.9 billion. Airlines typically receive steep discounts on large orders.
On the New York Stock Exchange, Boeing shares were down 0.7 percent at $133.51 in afternoon trading.
Concerns about what U.S. airlines term unfair subsidies that Gulf carriers receive is likely to be further intensified by Qatar Airways’ order.
A $50 billion in illegal subsidies, financing that allows the carriers to offer some 30 flights a day to the United States at fares substantially below what U.S. airlines can offer, was received by Qatar Airways, Etihad Airways and Emirates airline, said Delta Air Lines Chief Executive Officer Ed Bastian said earlier on Friday.
The United Arab Emirates and Qatar together “have more widebodies on order than all the Chinese airlines and U.S. airlines combined,” Bastian said at an event in New York, even though they have a population the size of the U.S. state of Ohio.
“That doesn’t sound fair, that doesn’t sound free,” he said.
(Adapted from Reuters)
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