British travel company TUI Travel has struck a deal with the Boeing Company (NYSE:BA) to buy 60 Boeing 737 MAX planes, together worth $6 billion, in a plan to modernize its fleet with more fuel-efficient aircraft.
Exactly how much TUI will pay wasn’t disclosed, but the company said it had secured the planes with a “significant discount” to the list price of $6 billion.
TUI Travel is the world’s largest tour operator, with six European airlines, a fleet of 141 aircraft and a presence in 180 countries.
“Having a modern, cost-efficient and reliable fleet is strategically important to the group,” wrote the firm in a press statement.
TUI said that replacing more than 100 planes in its fleet, over 10 years, will help keep the firm competitive and environmentally friendly. It expects that the savings from the new craft will outweigh the significant cost.
Continue Reading Below
Shareholders must first approve the deal, under United Kingdom securities regulations.
Airlines have sought to buy more fuel-efficient craft from Boeing and its European competitor Airbus in recent years, as fuel costs climb to more than 40 percent of total expenses for many airlines, according to Bloomberg.
Boeing’s 737 MAX planes will be 13 percent more fuel-efficient and less noisy than earlier models of the aircraft.
TUI Travel can buy an additional 60 Boeing 737 MAX planes on the same terms and up to 30 beyond that on terms to be later negotiated. The first batch of planes will be delivered to TUI from January 2018 to March 2023.
In its fiscal 2012, TUI had 14.46 billion British pounds in revenue and 490 GBP million in profit. In its first fiscal half of 2013, the company earned slightly less revenue than the year before but cut its operating losses.