Allegiant Air is poised to order 50 of Boeing Co’s 737 MAX jets, people familiar with the matter said, rejecting offers by traditional supplier Airbus SE as the no-frills carrier seeks to capture a boom in a US tourist industry recovering from the COVID-19 pandemic.
The surprise deal — worth US$5 billion at list prices — stems a series of setbacks for Boeing and overturns the airline’s previous strategy of picking up secondhand jets at bargain prices, which had helped it accumulate more than 100 jets built by Boeing’s European rival.
The switch of suppliers is the third such airline defection in as many weeks, this time working in Boeing’s favor after the US aircraft maker lost hard-fought medium-haul contests to Airbus at KLM Royal Dutch Airlines and Australia’s Qantas Airways Ltd.
Photo: Reuters
Such “flips” are rare due to the cost of retraining pilots, but reflect fierce competition for new business as the aerospace industry seeks to recover from its worst-ever recession.
Boeing, Airbus and Allegiant Air, a unit of Allegiant Travel Co, declined to comment.
The deal is the latest sign of accelerated growth among “ultra-low-cost” carriers that combine rock-bottom fares with optional charges.
Such carriers are expected to emerge in a position of relative strength from the pandemic.
“The leisure market is coming back in droves relative to the business market,” one of the people familiar with Allegiant’s plans said.
The Las Vegas, Nevada-based carrier operates 122 A319 or A320 jets, only 13 of which were ordered directly from Airbus, European data showed.
The 737 MAX planes would help Allegiant’s growth strategy and replace aging aircraft over the coming years, although it would continue to be an Airbus operator.
The order comes after a contest waged at least partially between the 737 MAX 7 and the Airbus A220, two of the people said, although some larger MAX 8200 variants might also be involved.
“This is huge. Allegiant was in line to order the A220,” Leeham Co analyst Scott Hamilton said, adding that the outcome suggested that Allegiant had received a “screaming deal” from Boeing, as well as the ability to get deliveries more quickly.
The deal, which is likely to be counted in last month’s orders for Boeing, caps a tight annual order race with Airbus.
Boeing bounced back from a safety crisis to sell some 700 MAXs through the end of November. Next week, the two aircraft makers are due to publish their data for last year.
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