CHICAGO: Boeing Co. isn’t waiting for next month’s Farnborough International Airshow to unveil blockbuster aircraft deals — or start booking cash.
The Chicago-based planemaker is poised to bolster its backlog with orders valued at $14.4 billion thanks to two transactions announced Monday. That’s a break from an industry practice of stockpiling sales for the biggest annual trade expo, which alternates between Paris and Farnborough, outside London.
Bamboo Airways, a Vietnamese startup, signed a commitment for 20 of Boeing’s twin-aisle 787-9 Dreamliners, the companies said in a statement. That’s a deal of about $5.6 billion before customary discounts. Earlier in the day, Jet Airways India Ltd. announced it was purchasing 75 of Boeing’s 737 Max single-aisle planes, a transaction valued at $8.8 billion based on list prices.
The two deals underscore the tilt of the aerospace market to Asia, where airlines are stocking up on aircraft to serve a rapidly expanding middle class. The orders also show that Boeing has access to a wider market in the region beyond China, where it could become an easy target if trade tensions with the U.S. escalate. Premier Li Keqiang said Monday that the Asian giant is willing to step up cooperation with Airbus SE.
“While China is a big and important market, there are other markets in Asia that are in demand,” said Shukor Yusof, founder of aviation consulting firm Endau Analytics in Malaysia. “Southeast Asia is a gold mine.”
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Bamboo Airways made a deposit in mid-June to reserve the carbon-composite Dreamliners, which are tentatively scheduled for delivery in 2020 and 2021. The carrier plans to begin commercial service next year from its base in Hanoi, Vietnam, flying first within the country before expanding to markets such as China, South Korea and Japan.
The latest purchase brings Jet’s backlog for the narrow-body plane to 225, the company said in a statement. The Mumbai-based airline had already placed two 75-plane orders, the most recent in April, with the first 737 Max delivery arriving last week.
Jet and its Indian rivals are expanding fleets as demand for domestic flights surges. Rival SpiceJet Ltd. has ordered more than 200 single-aisle aircraft from Boeing, while market leader IndiGo, operated by InterGlobe Aviation Ltd., is the biggest customer for Airbus SE’s competing A320neo plane.
New sales are also important contributors to Boeing’s cash flow. Customers typically make small advance deposits, followed by large “progress” payments about 18 to 24 months ahead of an aircraft’s delivery as Boeing starts ordering equipment and cutting metal.
Such prepayments will generate about $5 billion in cash for the Chicago-based planemaker this year, up from $4.5 billion in 2017, David Strauss, an analyst with Barclays Capital Inc., said in a research note. That would account for more than one-third of the $14 billion in free cash that Boeing is expected to produce this year.
Boeing had netted 306 commercial aircraft orders as of May 31, according to its website.