(Reuters) -British Airways owner IAG said on Thursday it has agreed to order 50 Boeing 737 MAX jets for delivery between 2023 and 2027, in a vote of confidence in the struggling U.S. planemaker.
The order for 25 737-8-200 and 25 737 MAX 10 jets to be used for short-haul operations at IAG-owned airlines is worth $6.25 billion at list prices, though the company said it had negotiated a substantial discount, as is typical in the industry.
IAG, which owns Ireland’s Aer Lingus and Spain’s Iberia and Vueling in addition to British Airways, also has a further 100 purchase options as part of the deal, which is subject to shareholder approval.
“The addition of new Boeing 737s is an important part of IAG’s short-haul fleet renewal,” IAG Chief Executive Luis Gallego said in a statement.
The deal falls short of a blockbuster non-binding commitment for 200 737 MAX jets placed under former chief executive Willie Walsh at the Paris Airshow 2019 that was a welcome lifeline to Boeing when the model was grounded after two fatal crashes.
But the firm 737 MAX 10 order from a top-tier customer is an important signal to the market at a time when Boeing faces an increasingly high-stakes battle to win certification of the largest MAX variant before a new safety standard on cockpit alerts takes effect at year-end.
Boeing’s financial health hinges on the resumption of deliveries of 787 Dreamliners and clearing MAX inventories, company executives and analysts have said.
Reuters in February reported IAG was likely to place a slimmed-down version of its 2019 commitment involving closer to 50 jets than the original 200.
IAG’s then-Chief Financial Officer Steve Gunning told analysts in November that the airline group would need some additional short-haul aircraft towards 2024 or 2025 and hinted that any order would include the 737 MAX.
(Reporting by Jamie Freed in Sydney and Sachin Ravikumar in Bengaluru; Editing by Sherry Jacob-Phillips and Jan Harvey)