200 Airbus & Boeing Jets Ordered?

Airbus and Boeing are circling what could be the largest prize of the upcoming Farnborough Airshow: a contract worth up to 200 jets.

Dublin-based SMBC Aviation Capital is weighing a split order that, while totaling 200, would include roughly 100 737 MAXs from Boeing and 100 A320neo family jets from Airbus.

Flagged by recent reporting, the sizeable contract comes amid a rally to secure delivery slots as availability becomes scarce not just for airlines but also for lessors deep into this decade and into the early-2030s.

SMBC’s Blockbuster Airbus & Boeing Order

SMBC is reported to be in advanced talks with Airbus and Boeing as both contracts approach the rough triple-digit mark to lock in a large number of next-generation narrowbodies.

This type of contract is designed to place jets with airline customers over the coming decades who haven’t gone directly through planemakers and prefer leasing.

A deal placement sooner rather than later gives SMBC, just like passenger airlines, the time to take advantage of the pricing and delivery positions that can be negotiated. If decisions are not made now, the slots will become even scarcer, threatening available capacity for many.

While a final order could still shift in terms of sizing or timing, the parties are working closely ahead of the Farnborough Airshow’s commencement to get something over the line. However, speed would need to be on all three parties’ sides to make it work this week.

Whether it’s this week or next month, such a package for up to 200 aircraft is a landmark deal for Airbus and Boeing to secure, let alone for SMBC, as it strives to increase its position in the industry and sits just behind AerCap as the largest lessor in the world.

Lessor Orders Matter Just As Much

While aircraft lessors like SMBC may purchase 100 jets and those jets do not have a designated end destination at the time the contract is signed, that doesn’t make them any less important. There are still 200 planes to be built; their specific end destinations from a flying standpoint will be confirmed in due course.

The large lessor orders carry strong strategic weight for planemakers that work closely with these companies, enabling airlines that do not purchase directly to continue growing and renewing their fleets without the financial burden of owning outright.

It’s narrowbodies like the 737 MAX and A320neo that are the most prominent in portfolios, given their widespread adoption and low risk, which appeals to many smaller airlines that are not able to buy planes outright.

A 200-jet order for SMBC is a powerful move that gives them an expansive portfolio to manage the expected rapid rise of commercial travel demand in the coming decades and also helps replace ageing 737NGs and A320ceos, among other regional types.

For Airbus and Boeing, it’s another sizeable addition to their backlog, albeit one that comes amid a desperate need to scale production rates, with the backlog outpacing the planes being shipped every month.

After years of supply chain discomfort, the backlogs have swelled to thousands. Furthermore, missed delivery windows for existing planes have created a knock-on effect, resulting in delays and pressure on future slots even into the 2030s.