Biggest aircraft order in history: Boeing's $20 billion deal

Rusdi Kirana, president of Lion Air, right, with inesh Keskar, senior vice president of Asia-Pacific and India sales for Boeing.
Rusdi Kirana, president of Lion Air, right, with inesh Keskar, senior vice president of Asia-Pacific and India sales for Boeing. Photo: Bloomberg

Boeing and Indonesian carrier Lion Air formally signed Tuesday a $US22.4 billion ($A20.9 billion) deal for 230 aircraft, the single largest contract in commercial aviation history.

Lion Air ordered 201 Boeing 737 MAX and 29 next-generation 737-900ERs, with purchase rights for an additional 150 airplanes from the US manufacturer to strengthen its domestic operations and expand internationally.

The deal was first announced on the sidelines of an Asia-Pacific summit in Bali, Indonesia in November attended by US President Barack Obama, and was then estimated to be worth $US21.7 billion.

"We're excited to be the first airline in Asia to fly the 737 MAX," Rusdi Kirana, Lion Air's founder and president director, said in a statement.

The first aircraft will be delivered in 2017, and the deliveries will run up until 2026, said Kirana, who signed the deal on the opening day of the Singapore Airshow, one of Asia's largest aviation trade fairs.

Kirana said the purchases would be financed by funds from the US Export Import Bank and private banks such as BNP Paribas.

The single-aisle 737-MAX is an upgraded and more fuel-efficient version of the 737, the world's best-selling commercial airplane. The 737-900ER is the extended-range variant.

With some 240 million people, Indonesia is the world's fourth most populous nation and most far-flung archipelago with more than 17,000 islands scattered across 33 provinces.

Air travel has grown sharply in recent years with the emergence of budget carriers like Lion Air as well as rising incomes as a result of steady economic growth.

Dinesh Keskar, vice president of Asia Pacific and India for sales at Boeing Commercial Airplanes, described the deal with Lion Air as "the largest order in the history of aviation that I can know of."

Lion Air last year carried 85,000 passengers a day domestically and expects to increase this to 100,000 passengers daily by the end of this year, Kirana said.

The carrier has a 51 per cent domestic market share and is aiming to raise it to 60 percent.

"Once you can go to 60 per cent, your company is solid," Kirana said, adding the carrier would go public once it gets a 60-per cent market share.

Lion Air is also preparing for an open-skies agreement within the Association of Southeast Asian Nations (ASEAN) which is due to come into effect by 2015, which would enable the carrier to expand further overseas, he said.

Lion Air now flies to Singapore six times daily.

If ASEAN frees up the region's aviation market by 2015, Lion Air might consider firming up its purchase rights for the 150 planes, Kirana said.

AFP

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