Jet becomes first Indian airline to order Boeing 737 Max planes

To take delivery of 50 from 2017; in talks to lease five Airbus planes to Kuwait Airways

Plane maker Boeing has booked its first order for its fuel-efficient 737 Max aircraft from India, following Jet Airways' decision to acquire 50 such planes.

Boeing and Jet recently concluded a purchase agreement for the 737 Max-8, sources said. The 737 Max is expected to enter service in 2017.

At list price, the deal for 50 planes is valued at $5 billion ($100.5 million for each plane) but, typically, airlines secure discounts when placing orders. Jet is still negotiating the contract for the aircraft engine and has not formally announced its order. “For now, the airline has decided to order the 737 Max. Financing options will be decided closer to the delivery date,” a source said. Emails sent to both Jet and Boeing remained unanswered at the time of going to press.

MAX ORDER

• The 737 Max is expected to enter service in 2017
• The plane is Boeing's version of the latest fuel-efficient aircraft and competes with Airbus' A320neo
• While Airbus has bagged orders from IndiGo (150 A320neo) and GoAir (72 A320neo), Boeing so far had not been successful in selling the 737 Max to its customers in India

The 737 Max competes with Airbus A320neo. While Airbus has bagged orders from IndiGo (150 A320neo) and GoAir (72 A320neo), Boeing so far had not been successful in selling the 737 Max in India. SpiceJet is said to be evaluating it but has yet to take a decision. Boeing promises the 737 Max will be 13 per cent more fuel-efficient than the current generation of planes.

Currently, Jet Airways and Jet Konnect (JetLite) have 110 planes. This includes 69 Boeing 737 narow body ones, which the company flies on domestic and international routes. At present, Jet is the second largest domestic airline, with a market share of 22.5 per cent. Jet's international network is set to expand, with hopes to connect Abu Dhabi to 23 cities in India and use it as a hub to link Amman, Beriut, Cairo and other cities in the region. Overall the airline expects its domestic and international capacity to grow by five to six per cent and 10-12 per cent, respectively, next year. At an interaction with analysts after the fourth quarter results in May, the airline's vice-president (investor relations), K G Vishwanath, said Jet had 46 737s on order. The deliveries began earlier in 2013 and would continue for three years. A part of these will be to replace the existing aircraft in its fleet, as their leases end. The Centre for Asia Pacific Aviation, in its 2013-14 India outlook, estimated that Jet would order up to 200 planes, including the 50 of 737 Max, over the next few years. This could include eight to 10 wide body Boeing 777s and about 50 Airbus A320neos. “Jet Airways’ fleet plan will take a mature shape on conclusion of its deal with Etihad,” said Kapil Kaul of CAPA.

Kuwait deal
Jet is also in talks to lease five Airbus A330 planes, long-term, to Kuwait Airways, sources said. This would help the airline reduce its losses, as many of its Airbus planes have been on ground due to suspension of services on loss-making routes. This involved a cost of $16 million (Rs 96 crore) in the fourth quarter of 2012-13. The airline reported a loss of Rs 495 crore in that quarter. The airline has a fleet of 110 planes. This includes 14 Airbus A330s and 10 Boeing 777s. Of these, it has leased three Boeing 777s to Turkish Airlines and is due to receive two 777s from Thai Airways at the end of the lease term. Of the 14 A330s, Jet plans to lease five to Kuwait Airways and three to Etihad.