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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.

  • ADS says:

    Surely Norwegian’s experience of relying on a single short haul aircraft type, and a single long haul aircraft type … and the problems that this caused … have fundamentally changed fleet planning calculations?

    • Rui N. says:

      Why? Ryanair, Easyjet, Southwest, etc. do just fine.

      • The Savage Squirrel says:

        The point is that it is just fine …. until your aircrtaft is hit by the unexpected issue, and then it’s not. And if it’s ever not fine then it could be the end of your company.

        • dougzz99 says:

          I think it’s more nuanced than that. Norwegian had huge expansion and were pushing things to the limits such that they had no room for any issues. Building long haul service around a relatively new aircraft type was always a risk. Ryanair and Southwest have both taken the Max issues on the chin and survived. Rui’s examples stand as I see it.

          • Chrisasaurus says:

            That’s the difference – the all built their fleets around super old 737s, they didn’t so much survive the Max as never really be impacted by it because they only had a handful of them at the time their special failure mode came out.

            To ADS’s point if any of WN, FR etc built a fleet entirely based on the Max then clearly they wouldn’t still be here

  • BJ says:

    I think the smart money is now on a220s as opposed to a320s and 737s on shorthaul, both from airline and passenger perspectives.

    • Rhys says:

      Not really. A220 is too small for lots of routes.

      The thing is, Airbus doesn’t need to give steep discounts on the A320 family because it is already sold out years in advance.

      • BJ says:

        Currently tge a220-300 is approved for 150 I think with potentially 160. There is talk of a 500 series seating 200 which would be similar to an a320neo.

        • Rui N. says:

          Why would would Airbus invest to cannibalise its own very successfull product?

          • BJ says:

            I’ m no expert, I guess it was initially about removing competition and potentially gaining new customers and perhaps some technology. Having done that, I guess it is now about giving custoners more opportunities to find their best fit from airbus, which in many cases may be a mix of a220 and a320 series going forward.

          • Max says:

            Bombardier already had the plans ready for a -500 and a -700 version. Big investment would only be necessary to develop a -900 version, though that one would only make any sense once Airbus replaces the A320 series with something bigger.

        • Richie says:

          IAG need to seriously look at A220 aircraft for BA. A221s for BACF. A223/5s elsewhere. 2-2 seating for CE would work very well.

          • BJ says:

            I doubt you’ll ever see that, the moving curtain and blocked middle seats works too well for them.

    • dougzz99 says:

      It’s a nice thought BJ but the numbers don’t add up. Something like 60+ seats on a 321neo.

      • BJ says:

        Most operators don’t have or go for the 321 variant though, but it seems to be becoming increasingly popular. I can see the 320 variant increasingly losing out to 220 going forward. Nice for passengers given the 2 + 3 seating configuration and it’s quieter.

        • Rui N. says:

          Not true. The A321neo has more orders than then A320neo.

          • BJ says:

            That ‘s why I said “becoming increasingly popular”. However, to date the number of a320s built massively exceeds the number of a321.

  • Richie says:

    You get a good discount by just saying where are my Dreamliners.

  • Phillip says:

    What about Air Europa? Their current 737 fleet is not that old but they do have 737s so maintains fleet commonality. Granted the purchase is yet to be finalised.

    • Rui N. says:

      The deal has been cancelled

      • marcw says:

        There a new deal already in the making @Rui N. The idea is to buy Air Europa in small %.

        • Rhys says:

          I doubt IAG are making fleet decisions on an acquisition that may or may not happen in the next 5 years!

  • memesweeper says:

    Awful news for BA fans. I dislike the 737 and hope this order goes to Vueling/Iberia and is not destined for BA/Aer Lingus operations. This variant was grounded after causing over 300 avoidable deaths through bad design and testing. It’s a terribly compromised design. Avoid.

    • Mike says:

      Bad design and testing…. And bad software, bad management, bad oversight, bad cost management, bad offshoring, bad training. I’d rather not fly on one (I know someone will pop up and say after all the scrutiny it will be the safest plane ever, but no, not for me).

      • memesweeper says:

        All the scrutiny in the world can’t fix it IMO.

        • Lady London says:

          I really hope posters will share any info about where these are flying. I don’t care where I’m stranded or how much money I’m going to lose I am *not* stepping on one of these aircraft.

          • Novice says:

            Too right.

            I agree.

          • Londonsteve says:

            +1. Only a matter of time before another one falls out of the sky due to an inherent fault. The initial catastrophes happened so soon little real world data was accrued on the Max before it was grounded.

          • Dubious says:

            SQ now have a load of them in their fleet, so next time you pop over here, if you do a short regional flight (and sometimes a but longer than short) you may find them.

  • Mike M says:

    Might actually improve BA’s short haul fleet. My recent travels felt like I was flying on a rubbish and cheap airline instead of a national flag carrier.

  • Ollie says:

    I’d avoid BA if these start using these on European flights. Bad design & compromised.

    • dougzz99 says:

      Perhaps you will. However if the Max flight is £5 less the herd will stampede for it. Reality of short haul travel.

      • Novice says:

        Well they are welcome to it…. It’s a bit like Covid; I never told my family friends what to do if they weren’t bothered as long as I had n95 masks on (still do) and wash hands properly and don’t shake hands and sanitize everything.

        I’m only responsible for my decisions and in this case I wouldn’t care if I had to pay double to sit in a safer plane

  • Jack says:

    I would not feel comfortable flying onboard a plane which has caused over 300 deaths . It should be go to one of the other IAG airlines such as Vueling and not BA

    • Rui N. says:

      Then your only options are the A380 and the 787 really. Maybe the 777. All others have caused way more than 300 deaths.
      And you are OK with Vueling flyers dying then? Just not BA ones?

      • Max says:

        777 is out as it has no inbuilt anti-missile-defense system and therefore one got shot down by Russia-backed terrorists over Ukraine.

        Also the cockpit is so depressing that one pilot had enough of his life and crashed an entire plane on purpose (Malaysia Airlines).

        On the other hand for short-haul, you can add the Bombardier CS/Airbus A220 series which also has been very safe so far!

    • John T says:

      99% of people wouldn’t even realise they were on a MAX.

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