SMBC Aviation Capital Orders 14 Boeing 737Max Planes

Market aviation - aviatorsbuzz
A file photograph of a grounded Boeing 737 MAX aircraft are parked at Grant County International Airport in Washington. Source: Reuters

Dublin-based SMBC Aviation Capital, which is among the world’s largest aircraft leasing companies, has placed orders for 14, 737Max aircraft with Boeing Co, it was announced on Tuesday.

The new purchases will take SMBC Aviation Capital’s 737 MAX portfolio to 121 jets, a news report Mint said.

SMBC Aviation Portfolio to Increase

Peter Barrett, chief executive officer at SMBC Aviation Capital in a comment said: “We are pleased to have concluded an agreement with Boeing for the purchase of 14 low-cost carrier configured 737 MAX aircraft which is an aircraft we are seeing increased customer demand for following its successful return to service.”

SMBC Aviation Capital owned 496 aircraft, which were leased to different clients, including airlines, across the world, at the end of March, 31, 2021. The Ireland-based company had in 2018 signed a deal with Jet Airways (India) Limited, involving the sale and leaseback of 13 Boeing 737 MAX 8 aircraft.

Jet Airways discontinued operations in April 2019 due to a massive fund-crunch. The airline was subsequently dragged to the bankruptcy court by lenders. A resolution plan involving new owners is yet to be approved by the court.

Most airlines carry out sale and leaseback (SLB) of their aircraft to remove the aircraft, and its associated debt, from the carrier’s balance sheet.

Under an SLB transaction, the owner sells the aircraft to an aircraft lessor, and then takes it back on lease from the buyer.

In the first quarter of 2021, SMBC Aviation Capital delivered 13, 737-8s to customers, including 11 planes to Southwest Airlines in the U.S. and two planes to TUI in Europe.

SMBC Aviation Capital’s latest purchase of 14 Boeing 737Max aircraft follows recent orders and commitments from Alaska Airlines, Southwest Airlines and United Airlines, Boeing said in a statement adding that the total number of gross orders and commitments for the 737 MAX this year now exceeds 250 airplanes.

Fuel Efficient Aircraft

The Boeing 737 MAX aircraft, considered a more fuel-efficient plane than its predecessors, was grounded by civil aviation regulator the Directorate General of Civil Aviation (DGCA) on March 13, 2019 after aviation regulators worldwide did the same following the crash of an Ethiopian Airlines 737 MAX near Addis Ababa on March 10, killing 157 people, including four Indians.

This followed a Boeing 737 MAX of Lion Air crash last October 2018 that killed 180 people in Indonesia.

In an interview with Reuters Mr. Barrett, who estimated the leasing industry owns over 40% of the global passenger fleet, said that if any opportunities “present value and fit into our strategy, we’ll certainly have a look at them.”

Earlier, Boeing had announced that it had paused deliveries of its 737 MAX after an electrical issue grounded more than 100 of the planes worldwide earlier this month.

The aircraft maker had said that a final fix for the planes has taken longer than originally expected and comes as airlines are gearing up for a busy summer travel season after a pandemic-devastated 2020. CEO Dave Calhoun had told CNBC that he expected to finalise the repair instructions ‘in relatively short order’ but did not provide an exact date.

A fix for the electrical issues will likely take just a few days per airplane, Mr. Calhoun said. He said on a quarterly call that the new pause in MAX deliveries to airlines “will make our April deliveries very light.”

“At this time, we expect to catch up on deliveries over the balance of the year,” the Boeing CEO said. Boeing shares were down more than 3% in mid-day trading after the company reported a wider-than-expected loss.

U.S. carriers including Southwest Airlines Co., American Airlines Group Inc. and United Airlines Holdings Inc. had parked a combined 67 of the workhorse planes, about a third of the MAX jets currently in service around the world.

The manufacturing fault affects aircraft at 16 airlines, not the entire MAX fleet, Boeing said in a statement.


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