Willie Walsh Unhappiness With Airbus Prompted MAX Order

One of the biggest shockers at the Paris Air Show as IAG’s letter of intent for 200 Boeing 737 MAX aircraft. This order was unanticipated and represented a major lift for Boeing’s beleaguered 737 MAX. However, more details have come out as to why IAG ordered the 737 MAX. It seems now IAG is getting fed up with Airbus.

Comair 737 MAX
A 737 MAX in British Airways livery operated by Comair. Photo: Boeing

IAG’s 737 MAX order

IAG hasn’t officially released many details regarding their 737 MAX order. All we know, as of now, is that IAG has signed a letter of intent for 200 737 MAX aircraft, including both the MAX 8 and the MAX 10. However, it is unclear how many of each variant will be ordered. Furthermore, details regarding where the aircraft may be sent are still unknown. Vueling and LEVEL have been mentioned as potential recipients for the 737 MAX.

LEVEL
LEVEL is IAG’s long-haul low-cost subsidiary. Photo: LEVEL

The cost

Airlines do not buy bulk aircraft at list price. Manufacturers offer substantial discounts. On an order like this, it seems that IAG would get a significant deduction – perhaps more than 50% off the list price. Of course, this data is not made public.

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For Boeing, it makes sense that they would offer these aircraft at a lower cost to IAG than before. Firstly, the 737 MAX needed a huge boost of confidence. Several flaws have left airlines, pilots, and passengers concerned about the safety of the aircraft. Second, IAG selected the A320 for narrowbody operations. Boeing’s 737 MAX competes directly with this aircraft, so, it is very likely that Boeing wanted to beat Airbus for this order and thus offered even more attractive pricing. This pricing would have to be low enough to outweigh the costs IAG will incur by introducing a new fleet type.

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The distinct 737 MAX winglet could soon sport the livery of IAG carriers. Photo: Boeing

IAG and Airbus

Bloomberg reports that IAG is now starting to get fed up with Airbus. Previously, Willie Walsh, CEO of IAG, indicated that they were concerned about being too reliant on Airbus. Now, there is another reason: delivery delays. IAG is a major A320 and A320neo customer. Unfortunately, Airbus has faced several production delays with their narrowbody aircraft. Consequently, IAG has received its Airbus narrowbody aircraft quite late.

BA A320neo
IAG is reportedly upset with delays from Airbus. Photo: British Airways

Airbus still intends to compete against the 737 MAX order. However, barring any major changes to their delivery schedule and aircraft manufacturing program, IAG will likely stick with the MAX aircraft order.

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Overall

IAG primarily uses the A320 family for shorthaul operations. As a result, this order for 200 737 MAX aircraft came as a bit of a shock. Especially as IAG also ordered A321XLR aircraft. Ultimately, it seems that IAG is trying to send Airbus a message with this order. The question now is how Airbus will respond and if, perhaps at the eleventh hour, IAG will switch their order to A320neo aircraft.

Do you think IAG should stick with the 737 MAX? How do you think Airbus will respond? Let us know in the comments!

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Dirk Van Pamel

Completely stupid decision. Boeing has serious production flaws and safety issues. Better a late plane than an unsafe one. IAG is putting its passengers and reputation at high risk.

Nicholas

Couldn’t agree more, Dirk !

Daniel S Lion

I agree with Dirk!
Ordering 200 of the flawed MAX? That guy should be relieved of his job. Pushing MAX to low cost subsidiary lower fare paying customers would BE a crime…..

Nigel

Today’s quiz: can you name a single, recent commercial aircraft model that hasn’t had a delayed introduction?

There’s something else going on here…

Niklas Andersson

After Stockholm syndrom… we got the Brexit Syndrom… we don’t understand the move of the IAG CEO…

GK

I dunno who does the math at IAG but they seriously need to reconsider their methods. How on Earth can an aircraft that is delayed AND flawed seem like a more viable option than something that has just been delayed and presents no threat to customer and crew safety? If IAG can cancel orders for a delayed aircraft in favour of a flawed one, then I can’t see why every single Max customer doesn’t do the same and switch from the flawed aircraft to the delayed one. It’s because no matter what you choose, the waiting times are long. So… Read more »

Jim Nograles

If it is an emotional decision, then it is a misguided one. There is no intellectual reason to order Boeing 737 Max at any point of the day.

Adrian Cook

This isn’t the first time in recent memory that Boeing has had an issue with a new type. Remember the Dreamliner, battery issues. I am aware that manufacturers do have issues from time to time, but, the 737 max is still grounded. In light of the issues this potential order from BA is somewhat misguided. I won’t fly them and particularly in this plane

Mike Teleborian

The list of overlapping characteristics between BA and Ryanair is rapidly growing – starting with the fact that you have to pay for your luggage, no meal on European flights, and unprofessional support. Everything, but the price: same quality and standards as Ryanair, at a much higher cost for us. Was hoping they’d at least could afford better options with that much higher margin though. BA’s increasingly a more and more disappointing company.

Nicholas

Certain irony here, to those of us who remember how – 20-30 years ago – Airbus just couldn’t get a sale at BA. How times change.

Wick

A fantastic decision if they want to send passengers to any other airline. I will never risk flying on such an engineering wise flawed plan as the 737 Max.

Noah Bowie

This seems to be more of a desperate plea from Boeing in order to restore some faith (very little actually) in the 737 MAXimum crashes. I still believe that they’ll take the neos instead because the cost of retraining everybody who works on IAG short haul is just far too much to outweigh the discount they might get. Even if Airbus offers them a significant discount it doesn’t need to be as much as Boeing because they don’t need to convince Willie Walsh to retrain thousands of employees Plus imagine how the British press will rip them to shreds. “British… Read more »

Bob Braan

As other airlines cancel their 737 Max orders IAG could pick some up for a big discount.
Of course you can’t use them as they are not “fit for use”.
You have to pay extra for aircraft that are safe to use from Airbus.
New flaws are being found in the 737 Max faster than Boeing can fix the many known flaws.
Lemon laws should apply to aircraft. Boeing should have to buy back all the grounded aircraft since they are not “fit for use” and cannot be corrected in a reasonable amount of time.

Bob Braan

Willie is best buds with Boeing execs. The “order” was just to save face for Boeing at the Paris show.
It was not a firm order just a letter of intent which means nothing.

Paul Spindler

With a fleet the size of IAG’s it makes sense to have more than one supplier, American Airlines and United do the same. The only surprise is that Vueling is mentioned as a potential operator, I can understand BA Gatwick as they are run as a separate unit to BA Heathrow and don’t use containers for baggage. Not sure if Iberia use only containers but they have a fairly small, and old Airbus short hall fleet. The risk of the aircraft is mitigated because at this stage it’s only a LOI.

Mike Teleborian

As one BA pilot was joking there must have been a “buy 1 get 199 free” kind of deal. Can’t imagine how anyone in their mind would otherwise buy 200 coffins just like that given the current circumstances and how Boeing behaved and invested more in marketing than safety and engineering over the last several years.

warrenhheller

So what if late. Sure order crashing planes from boeing that are on time. who wants defectively designed, aerodynamically unbalanced, unstable planes, that crash. Boeings whole management, make that mismanagement team is going to prison for 346 murders, conspiracy, collusion, cover ups. The company will have to go bankrupt. The board made up of politically connected people, needs to be replaced by aeronautical scientists and engineers, electrical engineers, battery engineers, safety, structural, and metallurgical engineers to name a few. This is work for experts.This is new material.We need lawyers and judges to tell there what is right and wrong and… Read more »

Joanna Bailey

I think we’d all prefer a plane to be late rather than dangerous. But I doubt very much anyone will go to prison or that Boeing will go bankrupt – they are too big to fail.

Paul Morris

Will certainly avoid IAG group if this order goes ahead. Walsh and IAG don’t care about customers only the P&L bottom line. Hence the opportunity to buy flawed aircraft at “knock down prices”. The BA product has been devalued over the last five years to the point that they are now offering a product that can only be compared to LCC.
Staff are poorly treated and recompensed. Customer complaints are rising and are not dealt with by more than a curesory offer of AVIOS. Final comment of the Max, Would you want to fly one ? As a pilot I wouldn’t.

Porter Lafayette

Bad impulsive misguided decision. IAG is counting on an uninformed and forgetful flying public. I do not think that is very smart. The 737MAX is a Flying Deathtrap. #Boycott737MAX#

James Looker

Won’t fly BA if they put me on a 737MAX.

Aviationtrev

The MAX will rise again under another name. It will be safe and sound, Boeing is not going to make this mistake again. Anyone remember the Computer problems the A320 had in the early days. The crash at the Paris airshow, pilots fighting for control of flights and only just averting disaster and look at it now. Regarding the “Maths” Boeing are giving these away probably at cost. They need a big order from a big player like this one to rebuild faith in the product and themselves from other carriers. This is a clever business move on IAG’s and… Read more »