The order for 208 narrowbody planes includes 150 MAX aircraft and puts Southwest, a loyal Boeing customer, first in line to take delivery of the upcoming revamp of the best-selling 737, which will feature a new energy-efficient engine.
The order reflects robust demand for fuel-efficient planes as the airline industry struggles to rebound from a painful downturn and cope with volatile oil prices. The Southwest deal is also one of the last major aircraft orders up for grabs from U.S. carriers looking to replace aging models.
It's been a very good year for orders, really driven by the re-engined platforms for Airbus and Boeing, said Peter Arment, an aerospace and defense analyst with Sterne, Agee & Leach. We do expect that to continue in 2012.
He said Boeing would likely garner more orders for its 737 MAX from existing customers, and noted the company was currently competing with chief rival Airbus
Delta Air Lines
The MAX orders, combined with a strong existing backlog for other 737 models, will allow Boeing to raise production rates to record levels on one of its most profitable plane programs, Arment said.
Longer term, it's going to help generate some additional earnings power for the company, Arment added.
MORE ORDERS EXPECTED
Boeing reported commitments for 948 MAX airplanes and said the figure could climb to 1,500 by the end of next year. It said the Southwest deal was its largest firm order ever in dollar value and the number of airplanes.
Private Indonesian carrier Lion Air last month placed an order for 230 planes, including 201 of the MAX that Boeing said at that time was its largest order, but those orders were not firm.
It truly is Christmas come early for the Boeing Co, Jim Albaugh, Boeing's chief executive for commercial planes, told a press briefing held in Dallas to announce the Southwest order.
Later on Tuesday, Albaugh told the Reuters Manufacturing and Transportation Summit that next year looks like it's going to be a very good year as well for orders, assuming there is no economic meltdown.
In addition to the MAX airplanes, Southwest also said it will buy 58 737 Next-Generation aircraft. The traditional discount carrier has a fleet of 699 planes, including 88 Boeing 717s acquired when it bought AirTran this year.
Boeing said the MAX, which is competing with Airbus's re-engined A320neo family, cuts fuel burn by an additional 10 percent to 12 percent over current single-aisle airplanes. CFM International, a joint venture between General Electric Co
Boeing on Tuesday also announced inaugural list prices for its 737 MAX aircraft. The 737 MAX 8 will sell for a catalogue price of $95.2 million, Boeing said on its website, while the larger 737 MAX 9 will sell for $101.7 million.
Shares of Boeing closed flat at $70.90 in New York Stock Exchange trading.
(Reporting by Kyle Peterson in Chicago, Karen Jacobs in Atlanta and Bijoy Koyitty in Bangalore; Editing by Derek Caney, John Wallace, Gary Hill)