United States based aircraft maker Boeing Co is trying to regain investor confidence on its 737 Max planes after the two year global grounding of the planes as the company unveiled a new order for the planes that have be only recently been given permission to commercially fly again.
The news propped up the shares of the company by 6 per cent.
This new order is for 24 of the 737-8 model of the company to a client who is a backer of Canadian low-cost carrier Flair Airlines. There were also reports earlier that Boeing was set get another much larger order for the planes from a much larger deal with America’s Southwest Airlines.
After the end of the two-year grounding of the 737 Max planes globally following two deadly crashes in Indonesia and Ethiopia in which 346 people were killed, Boeing has been trying to rebuild confidence about the planes among airlines while also trying to re-establish its image with passengers.
It was two years ago in this week that the Ethiopian accident had occurred and the final investigative report of the incident is expected to be disclosed at any point in time now.
An agreement to purchase 24 of the 737-8 airplanes, with a clause to buy a further 60, was struck by the company with Miami-based private equity firm 777 Partners, which owns a stake in in Flair Airlines, Boeing said.
Only one plane for domestic flights is currently being operated by Flair which was re-launched recently by veterans of European budget airline giant Wizz Air. The airline has said that starting this year, it would lease 13 of the 24 aircraft from 777 Partners.
There were reports earlier that a deal between Boeing and Southwest Airlines was very close, for the sale of dozens of 737 Max 7 jets which would potentially be the largest order for the planes since the ban on the flying of the 737 Max planes was lifted last year.
For the US plane maker, these two deals would be crucial for cash injection in the company which reported a debt of more than $60 billion and a historic loss of $12 billion just last year – the year where its business was also hit by the pandemic slump for the airline industry in addition to the ban on its 737 Max planes.
According to analysts, the airlines that would make it easily thgrough the pandemic crisis for the global airline industry would be the ultra low-cost carriers, or ULCCs, because they offer a no-frills experience at very low prices. These airlines are gaining popularity in Europe’s fragmented market in which Hungarian Wizz Air – a customer of European airplane maker Airbus, is rivalling the likes of Ireland’s Ryanair, a top Boeing user like Southwest.
However in North America, the growth of ULCCs has been relatively slow.
Boeing was up against the newer Airbus A220 for its order at Southwest. According ot analysts, bagging the Southwest deal is very important for Boeing to stage a broader recovery for its business.
(Adapted from TheGlobeAndMail.com)