Avolon agrees $4 billion deal for 40 Boeing 737 MAX jets

On Thursday, global leasing giant Avolon announced it will order 40 Boeing (BA.N) 737 MAX airplanes for over $4 billion at current list prices, a boost for the U.S. planemaker amid new delivery concerns.

Avolon, the world’s third-largest aircraft leasing company, said the new planes will raise its owned, controlled, and committed fleet to 870 aircraft from 2027 to 2030.

Boeing announced a day earlier that it would increase 737 MAX production in the second half of the year to make up for a second-quarter delay due to manufacturing difficulties.

Boeing is clearly addressing their well-documented concerns. “We have confidence in the (MAX) program’s fundamentals and Boeing’s ability to deliver these aircraft,” Chief Executive Andy Cronin told Reuters.

Cronin said Boeing’s latest production issue may delay certain aircraft deliveries but won’t demand compensation or significantly harm its operations.

Before Thursday’s deal, 184 of Avolon’s 252 jets were Airbus’ (AIR.PA) best-selling A320neo series.

Cronin acknowledged that Avolon understood that Airbus had contacted a “wide number of customers” concerning manufacturing schedules for next year. Reuters reported supply delays last week.

Over the preceding two to three quarters, industry-wide supply chain difficulties had improved.

“But I think everyone’s realistic… “These challenges will continue into next year,” Cronin warned.

The Dublin-based lessor reported $599 million in lease revenue and $56 million in net income in the first quarter, citing strong aircraft demand and increased leasing activity due to a jet shortfall.