IAG is finally going ahead with its decision announced three years ago, to place orders for the B737MAX, since rebranded by Boeing to the B737-8 and B737-10.
At the time, its Letter of Intent announcement to purchase 200 of the aircraft type was met with astonishment, as the aircraft’s future at that time still hung in the balance after two fatal crashes in Indonesia and Ethiopia. It was rumoured in 2019 that IAG had secured a bargain basement deal to purchase the new fleet.
But the reaction was also based on IAG’s history of buying from Airbus particularly for the single aisle fleets of its group airlines.
This week, IAG tells me, ‘IAG has a longstanding relationship with both Airbus and Boeing,’ swerving the nagging question of its brand loyalty.
A lot has happened since 2019. A global shutdown of air travel during the pandemic, forced the brakes on any new large purchases. Even in a postpandemic travel era, market dynamics are changing and unpredictable. The original order has been water down from 100 to a 50 aircraft. There have been other mitigating developments. The MAX itself has passed muster, having undergone the full scrutiny of regulators and several modifications, recertified, and back in service around the world.
It’s worth considering buying trends among large airlines. On the one hand it is standard practice among many airlines to operate a mixed fleet. However IAG has traditionally gone with Airbus for shorthaul so it marks a turning point for this group of seven airlines.
The new MAX’s are to be shared across IAG’s airlines. For IAG airline British Airways, if it does deploy the MAX, this signals a shift in its single aisle fleet which consists mainly of the A320 family of aircraft. Its single aisle fleet consists of 28 x A321-200s, with the widest single aisle fuselage on the market, and a passenger capacity of 220. The A320-200 is a stalwart of the BA fleet, numbering 83, carrying up to 180 passengers, and at the smaller end is the A319-100, 30 in the fleet, with a capacity of 144 passengers. The narrowbody fleet is augmented by Embraer with 24 x E190s.
Compare this to the MAX type on order which amounts to 25 x B737-8-200s and 25 x B737-10 aircraft, plus 100 options. The former carries up to 200 passengers, while the latter exceeds the current Airbus single aisle aircraft operated by BA, at 230 passengers. At 3,300 miles it also slightly exceeds the range of the A321-200 at 3000 miles (5,600km).
IAG´s chief executive Luis Gallego says, ‘The addition of new Boeing 737s is an important part of IAG´s shorthaul fleet renewal. These latest generation aircraft are more fuel efficient than those they will replace and in line with our commitment to achieving net zero carbon emissions by 2050.’
President and CEO of Boeing Commercial Airplanes Stan Deal says, ‘With the selection of the 737-8-200 and larger 737-10, IAG has invested in a sustainable and profitable future, as both variants will significantly lower operating costs and CO2 emissions.’
The new aircraft will be delivered between 2023 and 2027 and can be used by any airline in the Group for fleet replacement.
British Airways already operates a mixed fleet, and has for example 42 x B787s for its longhaul network on order with 32 delivered already. However, it will involve new investment in training, parts and maintenance to introduce the MAX into BA’s current single aisle Airbus A320 fleet. However there is one benefit for IAG in choosing the MAX – time. There is a backlog to the A320 family of more than 5000 aircraft, with customers facing delays, whereas there is little to no delay in deliveries of the MAX.
In fact the order for the MAX aircraft has been reduced by 50 aircraft from IAG’s original LOI pre-pandemic. This may also be down to the shifting landscape of the travel market. The outlook for air travel still remains uncertain as airlines grapple with potential peaks and troughs in demand depending on the direction and characteristics of the pandemic around the world.
Nevertheless it marks a significant win for Boeing, which badly needs a boost in an unforgiving post pandemic era. Not only has it battled with relaunching and rebranding the MAX to the market, but also delays to its widebody B777X. And on the plus side for Boeing, the reduced order does provide for 100 options.
Deal adds, ‘Today’s agreement for up to 150 airplanes, including 100 options, is a welcome addition of the 737 to IAG´s short-haul fleets and reflects our commitment to support the Group’s continued network recovery and future growth with Boeing’s unrivalled family of airplanes.’
For the author’s analysis on this topic for City AM, click HERE
