Boeing's troubled 737 Max wins major IAG deal

Owner of British Airways says it has every confidence in US plane maker

Boeing CEO Kevin McAllister and IAG counterpart Willie Walsh have agreed to a 200-plane deal for the troubled 737 Max model. Reuters

Boeing received a vote of confidence in its troubled 737 Max plane on Tuesday when one of the largest conglomerates, the International Airlines Group, said it wanted to buy 200 of the aircraft.

The companies signed a letter of intent for the purchase, the first since the 737 Maxs were grounded in March after two crashed within six months, killing 346 people.

At list prices the order would be worth $24 billion (Dh88.1bn) but IAG, which owns Aer Lingus, British Airways, Iberia and Vueling, said it was given a substantial discount.

The figure was not disclosed but large aviation orders are usually negotiated to less than half of list price.

The European collective IAG has for a long time bought single-aisle jets, used on some of its most popular routes, from Airbus.

"We have every confidence in Boeing and expect that the aircraft will make a successful return to service in the coming months, having received approval from the regulators," said Willie Walsh, chief executive of IAG.

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Paris Air Show - in pictures

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The deal surprised the aviation industry at the Paris Air Show this week, where many companies are cautious after the industry-wide fallout from the accidents.

Boeing, the US plane maker, is battling to regain the trust of passengers, pilots and regulators after a 737 operated by Indonesia's Lion Air crashed last October, and an Ethiopian Airlines jet went down in March.

Executives apologised again as the air show opened on Monday for its handling of the disasters, vowing a thorough review of its production processes as it seeks a fix for the anti-stall system suspected of causing the crashes.

Boeing is also rumoured to be looking at renaming the aircraft to repair its damaged reputation.

"Our priority is doing everything to get this plane safely returned to service. It is a pivotal moment for all of us," Boeing's head of commercial aircraft, Kevin McAllister, said at the Paris Air Show on Monday.

Boeing officials have faced many questions over the 737 Max crashes, thought to be caused by a faulty anti-stall system.

Critics accuse Boeing of failing to sufficiently test a system that used only one sensor to determine if the 737 was at risk of stalling, and of failing to adequately inform and train pilots.

Reports also suggest that US safety authorities allowed Boeing engineers to certify the system themselves, prompting worries of insufficient regulation.

The company has promised a software fix that will include two sensors, although some regulators may require the company to provide three to avoid uncertainty in case of different readings.

"We are very confident that the three layers of protection we are planning with the software update will prevent anything like this happening again," Mr McAllister said.

Yet it remains unclear when the aircraft will fly again, with Alexandre de Juniac, director general of the International Air Transport Association, saying that certification might not come before August.

Boeing has 140 of the model parked on its tarmac waiting for delivery, and has had to reduce monthly production to 42 planes from 52.