Boeing wins $8.5B SMBC Aviation order on jet demand
Boeing Co. won an $8.5 billion order from Japanese lessor SMBC Aviation Capital Ltd. as Asian aircraft-leasing companies bet on demand for new planes to serve the region's travel growth.
The order is for 80 737 Max 8 models for delivery between 2018 and 2022, the lessor said in a statement in Tokyo today. The contract value is based on list prices and purchasers usually get a discount. The deal is the largest single order of 737 Max 8s by a lessor, according to the statement.
Today's agreement follows a July deal by SMBC to purchase $11.8 billion of aircraft from Airbus Group NV in the largest single-aisle plane order ever placed by a leasing company. Asian lessors have placed billions in orders this year as economic growth in China, India and Southeast Asia stokes demand for more aircraft. Boeing and Airbus both predict China will overtake the U.S. as the world's largest plane market in two decades.
Last week, China Aircraft Leasing Group Holdings Ltd., the first Asian lessor to sell shares publicly, pledged to buy 100 Airbus aircraft valued at $10 billion. In August, BOC Aviation Pte, a unit of Bank of China Ltd., said it was buying $8.8 billion of Boeing jets, the Singapore-based lessor's biggest order ever.
Asian growth is propelling gains in air travel, encouraging carriers to expand. Today's agreement comes less than a month after Airbus won a commitment for 250 planes valued at $26 billion at list price from Indian budget carrier IndiGo.
Asian Demand
Carriers in several areas of Asia, including China and East Asia, may not have placed enough orders yet to cope with future demand, CIT Aerospace, a unit of New York-based CIT Group Inc. and one of the industry's larger and more established plane- leasing companies, said in a report this month.
SMBC's previous order was for 110 A320neos and five A320ceos, Sumitomo Corp., one of the shareholders of the world's third-largest aircraft leasing company, said in a statement July 15. The planes are due for delivery between 2016 and 2022. The $11.8 billion order is based on list prices. Buyers usually get a discount.
Boeing predicts the region will drive an increase in commercial aircraft sales to $5.2 trillion over the next 20 years, as China overtakes the U.S. as the world's largest aviation market.
The lessor may consider buying A330neo planes at a later point, SMBC Aviation Chief Executive Officer Peter Barrett told reporters in Farnborough, England, in July. Sumitomo Mitsui Banking Corp., Sumitomo Mitsui Finance & Leasing Co. -- both subsidiaries of Sumitomo Mitsui Financial Group Inc. -- and Sumitomo Corp. are the owners of SMBC Aviation.
As of October, the company owned and managed 376 aircraft valued at over $10 billion on lease to airline customers in over 40 countries, according to SMBC Aviation's website. The lessor's clients include US Airways, American Airlines and Qantas Airways Ltd.
To contact the reporter on this story: Kiyotaka Matsuda in Tokyo at kmatsudabloomberg.net To contact the editors responsible for this story: Anand Krishnamoorthy at anandkbloomberg.net Terje Langeland