Summary
- EL AL has chosen Boeing over Airbus for a potential narrowbody aircraft order, with the airline opting for the 737 MAX.
- The airline said that it would also approach lessors for Boeing 737 MAX aircraft and expected its first 737 MAX to arrive in 2027.
- However, the deal, worth between $2 billion and $2.5 billion, which includes aircraft purchases and leases, has not been finalized.
EL AL, the de facto flag carrier of Israel, has entered into exclusive negotiations with Boeing and aircraft lessors as it looks to order 30 Boeing 737 MAX aircraft. The Israeli carrier estimated that the total worth of the order would range between $2 billion and $2.5 billion, with EL AL choosing Boeing over Airbus.
Boeing’s better offer
On June 10, 2024, EL AL disclosed in a filing on the Tel Aviv Stock Exchange that in its Q1 2024 quarterly report, the airline did say it was examining offers it received from Airbus and Boeing, with EL AL looking to renew its narrowbody fleet. Following the two manufacturer’s proposals, EL AL announced that it would enter into exclusive negotiations with Boeing and aircraft leasing companies. The airline plans to acquire and/or lease around 30 Boeing 737 MAX aircraft, which would gradually replace its existing Boeing 737-800 Next Generation (NG) jets.
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In addition, the 737 MAXs would allow EL AL to expand its fleet of aircraft. Ch-aviation data showed that the Israeli airline has 18 Boeing 737-800s in its fleet with an average age of 20.1 years. In addition, it has eight Boeing 737-900ER (average age 9.5 years) and one Boeing 737-800 Boeing Converted Freighter (BCF) that is 22.1 years old.
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Deliveries from 2027
According to the stock exchange filing, deliveries would begin in 2027. However, the airline did not disclose whether those would be from aircraft lessors that have had delivery slots in their portfolios or that Boeing was able to wiggle in EL AL’s aircraft orders within that timeline.
When Brian West, the chief financial officer (CFO) and Executive Vice President of Finance at Boeing, spoke during the Bank of America Global Industrials Conference on March 20, he stated that the manufacturer has sold out the 737 and 787 programs through 2028. As a result, Boeing was now quoting customers for deliveries in 2029 and 2030.
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Nevertheless, EL AL warned that the schedule for the conclusion of the negotiations and the signing of an initial proposal document, which could be either a Memorandum of Understanding (MoU) or Letter of Intent (LoI), could last up to several weeks. At the same time, the airline expected to begin negotiations with aircraft lessors.
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Growing its fleet
EL AL estimated that the transaction, including the purchase and lease cost of the aircraft, replacement engines, and spare parts, could cost between $2 billion and $2.5 billion. Still, the airline warned that the stock exchange filing was merely a confirmation that it has entered exclusive negotiations with Boeing and that there was no certainty that it would sign a legally binding document with the aircraft manufacturer or any aircraft lessors.
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In March 2024, EL AL signed a preliminary agreement with Boeing for nine 787-9 aircraft, split between three firm orders and six options. On April 24, EL AL announced that it had finalized the agreement and that it would look to raise $140 million in a separate announcement.
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