| In a deal that was overseen by US President Barack Obama, Indonesia’s Lion Air broke new ground with the largest order of Boeing Aircraft in aviation history. The deal, which was finalised in Bali on 20 November 2011, is Boeing’s biggest sale by number and by value. Lion Air’s purchase of the 230 737 aircraft (including the new 737 MAX aircraft) is worth US$21.7 billion and includes purchase option rights for an additional 150 aircraft culminating in a potential total value of US$35 billion.
This trumps the recent order by Emirates consisting of 50 aircraft from Boeing (worth US$18 billion) which was the previous aviation record set earlier this month. Lion Air is the largest private airline operator in Indonesia. Citing a number of reasons for the deal’s uniqueness, Stephenson Harwood’s Paul Ng (who led the transaction on Lion Air’s behalf) stated that it was more than just the sheer size of the deal that made it headline news. The fact that the contract involved a model of new aircraft still in the development stages and the fact that it had a very long delivery stream presupposed that there would be complex legal and commercial issues arising out of risk allocation. Evidently the 737 MAX has been developed with the goal of raising fuel efficiency by up to 10-12 percent compared to single-aisle aeroplanes. And this represents a significant cost-saving for the operators. This deal comes on the back of numerous aircraft sales in November by Boeing to Emirates and Air India as well as transactions entered into by Boeing’s chief competitor Airbus to, amongst others, Qatar Airways. The latest slew of transactions signals a possible revival in the economy of a rise in global air traffic. The fact that the new technology ensures added cost advantages will bring to bear both larger orders being signed by airline operators as well as most likely a hike in global demand. President Obama commented that apart from creating stronger US-Indonesian ties, the Lion Air transaction resulted in the creation of 100,000 aviation jobs in the US. |
