Boeing's embattled Max gets a key win with its first post-crash deal
By JULIE JOHNSSON, BENJAMIN KATZ AND RICHARD CLOUGH | Bloomberg | Published: June 18, 2019
Boeing announced its first deal for 737 Max jets since a March grounding that followed two deadly crashes, landing a $24 billion agreement with British Airways owner IAG.
The airline group signed a letter of intent for 200 of the single-aisle planes, Boeing said in a statement Tuesday. IAG, led by a former 737 pilot, would take delivery of the planes between 2023 and 2027 assuming the deal is formalized.
The deal hands Boeing a much-needed lifeline as it struggles to get the Max back in the air amid a grounding that recently entered its fourth month. The crashes in October and March were caused when a software system received erroneous readings from a sensor, repeatedly forcing the nose of the planes down until pilots lost control.
"I wouldn't ask anybody to do something I wouldn't do myself," IAG Chief Executive Officer Willie Walsh, who flew 737 jets for about 18 years, told reporters at the Paris Air Show. "If you ask me, I would get on board a Max tomorrow."
Boeing climbed 3.5% to $367.21 at 11:28 a.m. in New York, extending gains after announcing the Max deal.
With the Max deal, Boeing has upended what looked to be a cake walk for Airbus at this year's Paris trade fair. As of Tuesday afternoon in Paris, Boeing had pulled ahead of its European rival with a total of $31.8 billion over two days, with Airbus about $150 million behind. The amounts are based on list prices, before customary discounts.
"We are truly honored and humbled by the leadership at International Airlines Group for placing their trust and confidence in the 737 Max and, ultimately, in the people of Boeing and our deep commitment to quality and safety above all else," Kevin McAllister, president if Boeing's jetliner unit, said in the statement.
Walsh said he flew the Max in a simulator, including a version with a software update Boeing is preparing for the Maneuvering Characteristics Augmentation System, which was implicated in the crashes.
"It was very helpful to see it in operation and understand the changes Boeing were proposing," Walsh said. "It gave me confidence."