Exclusive - Boeing gets $20.7 billion worth of 737 Max commitments from China: sources

SINGAPORE Fri Oct 25, 2013 9:10am EDT

A visitor looks at a display of miniature Boeing passenger aircraft at Aviation Expo China 2013 in Beijing September 25, 2013. REUTERS/Kim Kyung-Hoon

A visitor looks at a display of miniature Boeing passenger aircraft at Aviation Expo China 2013 in Beijing September 25, 2013.

Credit: Reuters/Kim Kyung-Hoon

SINGAPORE (Reuters) - Boeing Co (BA.N) has secured commitments for around 200 of its 737 Max aircraft, the upgraded variant of its best-selling short-haul planes, from multiple Chinese customers, said two sources familiar with the deals.

The deals are worth a combined $20.7 billion at list prices and must be approved by the Chinese government, a usual practice for aircraft orders in the country, before the customers can be identified, the sources said.

These are the first commitments for the 737 Max from China, the world's fastest-growing airline market. Officials from both Boeing and Airbus EAD.PA, which makes the A320 that competes with the 737, have said China is likely to overtake the United States as the world's largest market over the next 20 years.

The commitments come from a range of customers including state-owned airlines via the national procurement agency, China Aviation Supplies Holding Company, as well as leasing firms associated with the country's banks, the sources said.

China Aviation Supplies could not be immediately reached for comment.

Airlines such as Air China (601111.SS), China Eastern Airlines (600115.SS) and China Southern Airlines (600029.SS) are all operators of the current models of the 737 in the country.

Committing to the aircraft while waiting for the government to approve their fleet growth plans allow the airlines to secure some of the earlier delivery slots for the 737 Max, for which there have been 1,567 orders.

A Boeing spokesman declined to comment on the deal, and would only say, "discussions with customers are confidential."

The 737 Max has been upgraded with new CFM Leap engines, and has several other enhancements that make it a more fuel-efficient aircraft than the existing models. CFM is a joint venture between GE Aviation (GE.N) and Snecma.

Boeing said in a report in August that there are 1,650 single-aisle aircraft in China, with existing orders for another 700. These fly on domestic and regional routes of up to five hours.

The planemaker also forecast that China will take delivery of 3,900 single-aisle aircraft over the next 20 years.

The 737 Max competes with the Airbus A320 neo, the re-engined variant of the European planemaker's popular single-aisle aircraft.

Airbus said last month it has commitments for 100 A320 neo, including 60 from flag carrier Air China and 20 from leasing firm ICBC Leasing.

China is also developing its own single-aisle narrow-body aircraft, the Commercial Aircraft Corp of China (Comac) C919, to compete with the A320 and 737. The first flight has been delayed to 2015, with the deliveries not expected to begin until a few years after that.

(Editing by Ryan Woo)

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Comments (8)
UauS wrote:
“…200 of the latest variant of its best-selling 737 jet, the 737 Max…”
How many of them for reverse-engineering?..

Oct 24, 2013 10:37pm EDT  --  Report as abuse
The plot thickens.

Maybe a 21 Billion dollar order to Boeing might change your attitude a little.

Oct 25, 2013 11:16am EDT  --  Report as abuse
I hear you on the reverse engineering, but I don’t think there’s much on a 737 that’s top secret.

Obviously I’m more concerned that China’s attempting to influence US foriegn policy thru manipulation of so-called free trade policies.

Oct 25, 2013 11:28am EDT  --  Report as abuse
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