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British Airways parent IAG confirms massive Boeing 737 MAX order

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Three years ago, IAG, the parent of British Airways, Iberia and Aer Lingus, and Boeing agreed a huge order for the 737 MAX which, at the time, was still grounded following the loss of two Lion Air and Ethiopian Airlines flights.

It was widely assumed that the order was one of opportunism. With the aircraft’s reputation at rock bottom the prices that IAG negotiated were expected to be significantly lower than you would otherwise find.

Boeing 737 MAX scimitar wingtip

This was the same opportunism that led Ryanair to order 150 Boeing 737-800s in 2002. Ryanair called it the ‘deal of the century’.

It was just four months since the 9/11 attacks.  Boeing had announced plans to fire 30,000 workers and was predicting that future deliveries would be just half of their historic levels for the medium term.  And then Michael O’Leary, Ryanair’s CEO turned up.

Deal or no deal?

Back to IAG. The order, announced at the Paris Air Show, was only a Letter of Intent. In other words, both parties could walk away from the deal with little or no penalty.

This was especially prescient given the collapse in air traffic that followed in 2020 as a result of Covid-19. It was unclear whether IAG was serious about taking deliveries of 737s or just using it as a tool to negotiate a better deal with Airbus for its A320s, which has become the backbone of the short haul fleet across all the IAG airlines. British Airways retired its last 737 in 2015, after a slow phase out in favour of A320s.

Boeing 737 MAX

Once covid took hold it seemed even more likely that IAG would ditch the order. This will not be the case, however, as Boeing and IAG have just announced they are firming the order for 50 aircraft plus 100 options.

This is slightly less than the original 200 aircraft proposed in the letter of intent, but it is still substantial. IAG will be giving up all the efficiency savings of a unified short haul fleet which will include training a separate fleet of pilots and cabin crew to operate the type as well as all the parts and spares it needs to maintain two narrow body types.

We have no idea how much IAG has agreed to pay for the Boeing 737 MAX aircraft. The list price is between $120 million and $130 million per aircraft, but as with all airline orders the exact figures are not publicly available. IAG says it has “negotiated a substantial discount from the list price” so we can probably assume it is paying around half that figure.

Fundamentally, it needs to be cheap enough for BA, Iberia and the other airlines to give up on their long term strategy of focusing on Airbus for the short haul fleet to make it worthwhile.

British Airways A320

Will we see 737s at British Airways again?

Of the firm order, 25 aircraft will be the largest 737 type, the 737 MAX 10 whilst the remaining 25 are for the smaller 737-8-200. IAG has not specified which airlines will take the aircraft, only that they “can be used by any airline in the Group for fleet replacement.”

This is intriguing because the 737-8-200 is the special ‘Ryanair variant’. This is a version of the mid-size 737-8 configured for high density. It features an extra pair of exit doors to satisfy evacuation rules and enable airlines to fit it out with 197 seats.

It is unlikely that we see this ultra-high density aircraft at British Airways, even as part of its Euroflyer fleet from Gatwick. They are likely to be destined for Vueling, the Spanish low-cost carrier.

Whether British Airways takes delivery of any of the 737-10s remains to be seen. Its A319 fleet has an average age of over 20 years and will need replacing soon. The 737-10 could be a good fit – British Airways, like most airlines, is gradually up-gauging its fleet as air traffic grows, and the A319neo is the least popular aircraft in the A320 family, with just 72 out of a total 8,078.

From a customer experience perspective, I would prefer it if BA did not take any 737 MAXs. Whilst I have yet to fly a MAX, the fundamental geometry of the fuselage means it will always be narrower than an A320, leading to slightly narrower seats and aisle. It may be a small difference but it’s one I can’t help but notice when I board a 737.

The aircraft will be delivered between 2023 and 2027.

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Comments (121)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • SamG says:

    I’d say MAX 10 for Gatwick and the 8-200 for Vueling non-Barcelona bases

  • aDifferentSimon says:

    Basic/idiot question. I thought most planes were leased from a bank /capital heavy company. Will iag actually buy these?

    • Richie says:

      BA buys planes and keeps them.

      • Rui N. says:

        Even for airlines that don’t, it’s common for airlines to negotiate directly with Boeing/Airbus and then a lessor actually buys the planes.

    • jjoohhnn says:

      I was told by a BA pilot that when BA bought the 777-300ER, BA purchased the planes outright, they then sold them to a leasing company and then leased them back!

      • Rui N. says:

        It’s called “sale and lease back” (does what is says on the tin!). It’s a very common practice as well.

      • Mike says:

        Yes, the market fluctuates so if you can buy them cheaply, you can essentially ‘sell’ them and lease them back. Airlines do it all the time.

  • John says:

    I would expect these will all go to Vueling to make them an all 737 carrier. Vueling’s new A320neo aircraft can then be redistributed among the group as required.

  • Can says:

    Gave me chills

  • Thywillbedone says:

    I truly hate the 737 …it might be a workhorse, but it’s a dog in my eyes (all variants). Among other things, anyone taller than 5′ 8″ will have trouble seeing out the window due to how low they are on the fuselage …presumably down to the fact that people were considerably shorter when the design first came out 55(!) years ago.

  • Nick says:

    I don’t actually know where they’re going but have a horrible feeling some will be destined for Euroflyer. Wizz have placed exclusively A321s at LGW and have by far the lowest unit cost of anyone based there – BA desperately needs to match or better that to have a chance of competing profitably. Gatwick has a longer sector length so they need a neo-type aircraft – the A320s they currently have there just don’t cut it.

    Like Rhys, I don’t like 737s at all. Even the new ones are based on old design and technology, and they’re just not as nice to fly on as airbuses, even before you come to the Max safety angle that will definitely put some people off.

    • BJ says:

      You’re getting 1960s safety technology for cockpit warning systems which I believe has been implicated in a number of incidents. Despite this there is a rush to get the MAX 10 certified by the year end with same old systems before requirements change. I think that’s troubling. Seems weird also that they are still building aircraft without fly by wire in this day and age.

    • Panda Mick says:

      BA LHR – MXP 126 GBP
      Wizz, for the same day, from LGW, 6 GBP

      I feel that, now that Wizz have a foot hold at LGW, BA just won’t be able to compete there

      • SamG says:

        Enough southern punters who wouldn’t be seen dead on Wizzair presumably!

        • Londonsteve says:

          Their snobbery is only punishing themselves because if you don’t have status, flying Wizz Air is nicer than BA in 2022. I could give you a list of reasons as long as my arm, but let’s start with no cancellations, lost luggage or IT meltdowns. BA don’t have the faintest chance of competing with Wizz at LGW who are superbly run by Varadi, employ most of their support staff in low-cost Budapest and have that winning combination of being gutsy with growth opportunities yet cautious when it comes to leverage and cash. Snobby Southerners will have to put a peg on their nose because Wizz are going to gobble up the listless EZY and they’ll be competing with Ryanair for the no.1 spot after the takeover.

          • Thywillbedone says:

            To add: it is relatively cheap (and invariably there is good availability) to book the extra leg room seats which give a much better short haul travelling experience (between 2 and 4 hours) than BA can offer in ANY part of the plane. Hoping they expand their footprint at Gatwick as Luton is a pain to get to …

          • Londonsteve says:

            As a north Londoner, Gatwick used to be the awkward airport to get to, then Thameslink came along with cheap off-peak contactless fares and we can get a direct train to either Luton or Gatwick in roughly the same time and for a similar price (when factoring in the need to use a connecting shuttle at Luton). For those that prefer to drive, Luton Airport Parkway railway station offers amazingly cheap parking, especially at weekends and you’re probably at the terminal building using the train shuttle quicker than using any of the ‘on airport’ of ‘off airport’ long term car parks with their infrequent transfers. How about parking for £3 a day on weekends? When the DART cable railway opens between the train station and the terminal building, the two together will be a POD parking experience, but for pennies in comparison.

          • Dan says:

            Agreed. Wizz is great.

        • Lady London says:

          …. so will they be seen dead on a BA 737 MAX instead then?

          • Dubious says:

            There is no reply button to Londonsteve’s post so replying here.

            I predict that “When the DART cable railway opens”…the price of the car parking will go up…

  • AJA says:

    I don’t like the fact that these aircraft are narrow. I haven’t flown on a 737 in a long time so hope I can avoid these. Not keen either due to the safety angle as mentioned by Nick above although I realise that may be an irrational fear.

  • Char Char says:

    Should have scrapped the model completely

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