TOKYO- In a mixed week for Boeing, the aerospace giant has secured a significant order for its 737 MAX aircraft, even as it grapples with production delays and ongoing scrutiny of its flagship narrowbody jet.
Aviation Capital Group (ACG), a subsidiary of Japanese leasing firm Tokyo Century Corp, announced on Friday its order for 35 Boeing 737 MAX jets.
![Boeing Secures New Order for 19 737 MAX 10 and 16 737-8 from ACG](https://aviationa2z.com/wp-content/uploads/2023/08/image-179-1024x558.png)
Boeing 737 MAX 8 and 10 Order
The deal includes 16 Max 8 and 19 Max 10 aircraft, the latter still awaiting certification. This order comes as a welcome boost for Boeing, which has faced a series of setbacks in recent months.
The order reflects ACG’s strategy to modernize its fleet and align with industry trends toward more fuel-efficient aircraft.
ACG, a U.S.-based aircraft leasing powerhouse founded in 1989, has been a wholly-owned subsidiary of Tokyo Century Corp (TC) since December 2019. The company’s impressive portfolio currently includes 364 aircraft, with 305 owned and 59 managed. This latest order will further expand ACG’s fleet, which is projected to reach 483 aircraft, based on previous orders.
The leasing firm’s current fleet boasts an average age of just 6.2 years, with 97% comprised of highly sought-after narrow-body aircraft. This focus on modern, efficient planes positions ACG well in a market increasingly driven by cost-consciousness and environmental concerns.
TC’s Medium-Term Management Plan 2027, aptly themed “transform ourselves and bring about change,” provides the framework for this acquisition. The plan, known as “TC Transformation (TCX),” emphasizes four key areas of transformation: portfolio (PX), green (GX), digital (DX), and human resource and organizational (HRX).
The Boeing 737 MAX order falls under the PX initiative, demonstrating ACG’s proactive approach to asset management and risk mitigation. However, it’s the environmental benefits of these new aircraft that truly stand out.
The 737 MAX family offers impressive improvements over its predecessors, including a 20% reduction in fuel consumption and CO2 emissions, along with a 50% smaller noise footprint.
This order represents a significant step in our ongoing fleet transformation. By investing in the latest generation of narrow-body aircraft, we’re not only enhancing our portfolio but also contributing to the aviation industry’s sustainability goals.”
ACG Spokeperson stated
Industry analysts predict a surge in demand for aircraft operating leases, driven by growing passenger traffic in emerging markets and airlines’ need to upgrade their fleets.
Challenges for US Aerospace Giant
ACG’s investment in the 737 MAX positions the company to capitalize on the expected growth in short to mid-haul traffic.
However, Boeing’s challenges continue to mount. The company recently agreed to plead guilty to fraud conspiracy charges related to two fatal Max 8 crashes in 2018 and 2019.
Further compounding its troubles, January’s Alaska Airlines incident involving a Max 9 door plug blowout has led to increased scrutiny and a significant drop in Boeing’s share price.
The Max 10, Boeing’s largest variant of the 737 Max family, faces its own hurdles with certification delays. These delays have prompted major customers like United Airlines (UA) to consider alternative plans, potentially replacing their Max 10 orders with other aircraft types.
Production constraints imposed by the Federal Aviation Administration (FAA) in the wake of the Alaska Airlines (AS) incident have capped Max output at 38 per month, leading to customer frustrations over delivery delays.
A recent report by Bloomberg suggests that customers with deliveries scheduled for 2025 and 2026 may face additional delays of three to six months.
The impact of these delays is already being felt across the industry. Norwegian Air (DY), for instance, has announced reduced capacity growth this year due to delivery delays.
As the aviation industry looks ahead to the Farnborough Airshow, typically a showcase for major aircraft orders, Boeing’s absence from exhibiting its airliners underscores the company’s current challenges.
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