Aircraft leasing company Avolon said it had committed to ordering 40 Boeing 737 MAX aircraft in a deal worth over $4 billion at current list prices, a boost for the US planemaker as it grapples with fresh delivery issues.
Avolon is the world's third largest aircraft leasing firm.
It said the new jets are scheduled for delivery from 2027 to 2030 and will increase the overall size of its owned, managed and committed fleet to 870 aircraft.
The deal comes a day after Boeing said that it planned to ramp up production of the 737 MAX jets during the back half of the year to make up for a slowdown in the second quarter to fix manufacturing issues.
"Our commitment with Boeing reflects our confidence in the long-term outlook for the aviation sector, and increases our portfolio of young, modern, fuel-efficient aircraft," Avolon CEO Andy Cronin said.
"It will also support our airline customers who are looking to plan beyond the robust post-Covid traffic recovery and prepare for future growth, while also reducing their carbon emissions," he added.
Before today's transaction, rival Airbus's best-selling A320neo family of jets made up 184 of the 252 jets Avolon had committed to buying.
The deal with Boeing is subject to approval by Avolon's majority shareholder Bohai Leasing Co. Bohai is a majority-owned subsidiary of China's HNA Group.
The Dublin-based lessor also said today that demand for aircraft remains strong, with high levels of leasing activity amid a continued shortage of aircraft.
It said global passenger traffic continued to grow in the first quarter, with the reopening of the Chinese market an important catalyst as it delivered $599m of lease revenue and net income of $56m from January to March.
By the end of the first quarter, Avolon said it owned and managed a fleet of 578 aircraft, while its average owned fleet had an age of 6.3 years with an average remaining lease term of 6.9 years.
The company executed 31 lease transactions in the quarter comprising new aircraft leases, follow-on leases and lease extensions.
It also delivered nine new aircraft and transitioned nine aircraft to a total of 13 customers.
It also agreed letters of intent for the sale and leaseback of 12 aircraft during the three month period and sold two aircraft and agreed letters of intent for the sale of a further 13 aircraft.
Avolon said it added three new customers during the quarter to give it a total of 147 airline customers operating in 65 countries.
Its orderbook is fully placed for 2023 and 82% placed to the end of 2024, it added.
CEO Andy Cronin said the company benefitted from rising lease rates during the quarter as global passenger traffic continued to grow and the reopening of the Chinese market provided an important catalyst for increased travel in the region.
"Demand for aircraft remains strong, with high levels of leasing activity and a continued shortage of aircraft. This is supporting residual values and driving demand for lease extensions from airlines unable to access new deliveries," he said.
"With our low leverage and high levels of liquidity, we are well positioned to take advantage of future opportunities," he added.
