By Eric M. Johnson and Tim Hepher
SEATTLE/PARIS (Reuters) – Allegiant Air is close to ordering 50 Boeing 737 MAX jets worth $5 billion at list prices, people familiar with the matter said, as the low-cost U.S. airline eyes a rebound in tourism.
The deal for dozens of new jets would stem a series of commercial setbacks for Boeing Co. For Allegiant, it marks a shift from the airline’s previous strategy of picking up second-hand jets at bargain prices, which has helped it accumulate more than 100 jets built by Europe’s Airbus.
The airline’s change to Boeing comes after two of the planemaker’s key customers, KLM and Australia’s Qantas, late last year switched to Airbus, heightening competition between the two planemakers.
Such “flips” are rare due to the cost of retraining pilots, but reflect fierce competition for new business as the aerospace industry seeks to recover from its worst-ever recession.
Boeing, Airbus and Allegiant Air, a unit of Allegiant Travel Co , all declined to comment.
It is the latest sign of accelerated growth among “ultra-low-cost” carriers that combine rock-bottom fares with a menu of optional charges. Carriers like these are expected to emerge in a position of relative strength from the COVID-19 pandemic.
“The leisure market is coming back in droves relative to the business market,” said one of the sources familiar with Allegiant’s plans.
The Las Vegas-based carrier operates a total of 122 A319 or A320 jets, only 13 of which were ordered directly from Airbus, according to European data.
The new Boeing planes would replace retired jets and feed Allegiant’s growth plans over the coming years, the people said.
Mexico’s Viva Aerobus in December announced a commercial alliance with Allegiant to offer flights between the United States and Mexico.
The Allegiant order would come after a contest at least partially between the 737 MAX 7 and the Airbus A220, two of the people said.
Each 737 MAX 7 carries a list price of $99.7 million, but jets usually sell for less than half their official value with typical market discounts, aircraft industry sources say.
Boeing has had a strong year of 737 MAX sales, seizing on pent-up demand after a nearly two-year safety ban following fatal crashes. But it lost high-profile contests at Qantas Airways and the Dutch arm of Air France-KLM in December.
(Reporting by Eric M. Johnson in Seattle, Tim Hepher in Paris and Rajesh Kumar Singh in Chicago; Editing by Matthew Lewis)
