Large Boeing 737 MAX Order Threatened?

Boeing is close to securing an order for 150 of its 737 MAX aircraft from Turkish Airlines after a lengthy dispute threatened the deal.

Threats and problems stemming from agreements reached with engine maintenance and CFM International have repeatedly put what is intended to be a high-profile, landmark transaction at risk.

Exclusive reporting from Reuters, however, now suggests a contract is nearing completion, possibly as early as next week, after three people familiar with the matter confirmed negotiations were ongoing among all parties.

Why The Boeing Order Was Threatened

150 of the 737 MAX jets from Boeing ultimately form just one part of a larger commitment from the Turkish flag carrier that encompasses 225 units and was a package deal signed with the U.S. President and its own President.

Naturally, with the importance of seeking positive trade relations between Turkey and the United States, the order for commercial aircraft was significant in helping aid this; however, that didn’t mean it didn’t come without its complications

The 737-8 aircraft order following the deal didn’t progress to the finalisation stage as intended. Instead, Turkish Airlines quickly threatened to drop the 737-8 order and turn to Airbus over concerns about CFM engine pricing.

In its negotiations with Boeing, Turkish Airlines agreed that the jets would be powered by CFM International LEAP-1B engines, the exclusive engine option, and that this was critical to any progress on the contract.

During these negotiation stages, the disagreement that affected the contract’s fate was not the engines’ quality, but how much risk each side would accept for the cost of long-term engine repairs.

The overall aircraft purchase, along with associated engine constraints and supply-chain pressure, has hampered many contracts, with frustrations over spare-part costs, turnaround times, turbofan maintenance, and more.

These engine agreements are vital because, for Turkish Airlines, which is ambitious about the future, securing the right terms and limiting future downtime is vital.

Boeing Wants To Get The Deal Locked Down

Despite Turkish Airlines reaching an initial agreement with Boeing, finalising the deal remains the top priority. Now all parties are racing to get this over the line, including discussions with CFM International, which would provide the engines.

In the past, Turkish Airlines has voiced its displeasure and was not afraid to say it was assessing other options, including possibly adding more Airbus jets, with improved terms and future downtime assurances being limited with engine providers here.

Closing this deal would not only further bolster Boeing’s order book for the popular and previously troubled 737-8, but also give Turkish Airlines 150 aircraft that will serve as a major source of replacement and growth capacity in the coming decades.

Signing the agreement as soon as next week will also remove another obstacle in the companies’ negotiations. However, Reuters carefully flags that nothing is yet final, and talks could collapse, although they’re finally portrayed more positively.