Avolon Secures Massive $4B Deal For 40 Boeing 737 MAX Jets

May
02
2023
Photo by John McArthur on Unsplash

Avolon’s new deal to purchase Boeing 737 MAX jets is set to fuel aircraft demand. A new opportunity for Boeing to cement its position as a dominant player in the industry after a series of delivery setbacks.

Avolon, a Dubai-headquartered aircraft leasing firm, has secured a massive $4 billion deal for Boeing 737 MAX aircraft, one of the subjects of controversy and scrutiny in recent years. The announcement came just a day after Boeing declared its plan to ramp up production of the 737 MAX jets in the second half of this year.

Upon the agreement, the delivery of these new jets is scheduled from 2027 to 2030, totaling the number of owned, managed, and committed aircraft to 870.

Boeing 737 MAX is part of the Boeing 737 family. The fourth-generation jet made its debut in August 2011. However, functionality issues surfaced one year after its first commercial flight in May 2017. Two fatal crashes reportedly occurred in 2018 and 2019, sparkling widespread controversies and intense scrutiny from regulators and the aviation industry.

The American planemaker has since made significant efforts to address the issues and improve the safety of the aircraft. Avolon’s deal comes at an opportune time for Boeing, as the company has been constantly dealing with delivery issues.

Avolon CEO, Andy Cronin, acknowledged the manufacturing issue at Boeing, which he expects will delay some of the deliveries, but not to the degree that will fundamentally impact the business or necessitate a compensation discussion. According to Cronin, the MAX program’s fundamentals hold a promising future, and he also has confidence in Boeing’s ability to deliver the aircraft.

Dubin-based lessor achieved massive profits in the first quarter of 2023. The firm’s lease revenue sat at $599 million with a $56 million net income. These figures indicate strong demand for aircraft, signaling a return to profitability amid a continued shortage of jets.

The ongoing supply chain disruptions have challenged Boeing’s growth. Despite improvements over the last months, Avolon anticipates the difficulties to persist until the following year.

The new deal with Boeing is a welcome development for Avolon, further strengthening its position as a major aircraft leasing company. Avolon is bullish on the MAX program and Boeing’s ability to solve the delivery issue.

Bianca Van der Watt

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