Boeing (NYSE:BA), the lead aircraft manufacturer, received orders for the 737 Max plane from Monarch Airlines on October 31. The airline operator has ordered 30 of these single aisle jets. The news sent Boeing’s share up 1.2%. More importantly, this deal has made the 737 Max the fastest-selling aircraft of the American plane maker.
Boeing boasts of an order backlog for more than 5,500 jets as of the third quarter ended in September, and more than 4,000 units of the total backlog is for its top-selling model, the 737. As airlines kept demanding a jet that would be more fuel efficient, Boeing decided to make the 737 Max on the proven platform of the popular 737 airplane. The derivative plane, as seen from the heavy order flow, has become a very popular aircraft among operators.
Boeing 737 picture from Wikimedia Commons
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Rising popularity of the 737 Max
The re-engineered version of the plane has won solid orders from the time it was launched. To date the company has received orders for about 2,325 units from 48 customers across the globe. Monarch Airlines’ deal for 30 jets comes with an option for an additional 15 units to replace its current set of aging fleet. The U.K.-based operator had originally announced the deal at the recently concluded Farnborough air show but confirmed it only recently. The deal is valued at $3.2 billion at list price.
Monarch chief executive Andrew Swaffield said:
“The 737 MAX 8 fits our network strategy of serving our traditional European leisure routes in greater frequency, providing increased choice and service for Monarch customers, with significantly improved unit costs to our business”
The airline is working towards transforming its image from a traditional European charter carrier to leisure airline offering fantastic experience to its passengers by keeping a high reliability rate and greater efficiency. The operator is extremely hopeful that Boeing 737 would help the company move up to the desired level.
The 787 Max flaunts the latest and advanced CFM International LEAP-1B engines that provide greater fuel efficiency over similar range jets. The company claims that the derivative planes would be 14% more fuel efficient than the existing Next-Generation 737 planes. Not only this, operators of the 737 MAX 8 would enjoy 8% lower operating cost per seat relative to Airbus (EADSY) A320neo. The jet make has ensured to incorporate bleeding edge technology, and several other improvements to give the best reliability rate along with passenger comfort and pleasure.
The 737 aircraft is taking Boeing’s orders to record levels. Earlier in October, the jet maker had bagged orders from Alaska Air Group (ALK) for 10 737-900s. The deal is worth $990 million at list price. Such a continuous massive order flow has made the company to rethink its future production strategy. As per its earlier plan, Boeing had decided to ramp up production from its current 42 per month to 47 per month in 2017. But this is not the end. The plane maker is keen on pushing the production rate further up. Accordingly, the company said that it could boost the 737 production level to 52 a month in 2018. After the production rate is brought up, the company will be able to deliver 620 planes annually.
But several industry analysts are worried about such increased production level. However Boeing has dismissed all such doubts regarding the sustainability of the high production level. The single aisle market is going to grow at an enormous rate, and thus there lies no doubt regarding such instability.
Boeing’s order books are getting extremely heavy with loads of orders for the single aisle plane. The latest orders only confirm that narrow body market is going to expand in a robust way, and Boeing is preparing in the best possible manner to make the most of this opportunity.