NEW YORK — Boeing (IW 500/13) announced Monday it would sell 60 of its 737 jets to Air China for more than $6 billion in its latest big deal with an air carrier from an emerging economy.
The deal will include "next generation" 737 and 737 MAX airplanes, which are known for their fuel efficiency, Boeing said. Deliveries are expected between 2016 and 2020, Air China said.
"Our long-standing and productive partnership with Air China dates back to the airline's beginning, and we are proud the 737 has been part of their success," said Ihssane Mounir, Boeing's vice president of sales and marketing for Northeast Asia. "We are excited to see that the 737 family will play a significant role in Air China's continued success."
Boeing officials have highlighted strong commercial growth as a key offset to weakness in its government business in light of defense budget cuts.
Boeing chief operating office Dennis Muilenburg said earlier this month that air travel growth in emerging markets like China, India and Indonesia are expected to increase in light of the mismatch between economies that account for 40% of the world's population but just 14% of its airplanes.
"We'll have another billion travelers in China come into the marketplace over the next 20 years," Muilenburg told an investor conference December 3.
The strength in commercial orders "is not some kind of short-term cycle." The deal will grow Air China's fleet by about 8%, the airline said.
"The company expects the Boeing Aircraft will deliver more cost efficient performance and provide more comfortable services to its passengers," Air China said in a securities filing to the Hong Kong stock exchange.
Air China plans to finance the transaction through cash from its business operations and commercial bank loans.
The airline said the basic price of the jets is $5.9 billion, though that is subject to "price escalation" under a deal. Boeing granted Air China "significant price concessions" in the transaction, the Chinese company said.
Boeing last week announced it would boost its quarterly dividend by 25% and lift its share repurchase plan to $12 billion from $4.8 billion left in the current program's authorization.
Boeing said the Air China orders will only be added to its official log once the details are finalized. As of December 16, Boeing had net orders of commercial aircraft in 2014 of 1,317 planes, just shy of the 1,355 for 2013. The 737, popular for its fuel efficiency, accounted for the largest number of orders with 1,019.
Boeing shares rose 1.7% in midmorning trade to $128.31.
Copyright Agence France-Presse, 2014
