What will happen to IAG’s order for 200 Boeing 737 Max?

Since the grounding of the 737 Max in March 2019, Boeing has only received firm orders for 37 aircraft of the flawed model. Sun Express ordered ten, Southwest Airlines one, the remaining customers remained anonymous. The number of cancelled 737 Max aircraft, however, has reached triple figures – in March alone, Boeing had to take 150 off the books.

It’s a good thing for Boeing, that there is still a letter of intent for an order of 200 737 Max. It dates back to the summer of 2019 and was signed by BA and Iberia parent Company IAG. Group CEO Willie Walsh had first declared his interest in the aircraft in an interview with aeroTELEGRAPH and then signed the letter of intent for 200 Boeing 737 Max aircraft a couple of weeks later at the Paris Air Show.

Walsh is committed to the Boeing 737 Max

In hard times, IAG provided Boeing with a huge vote of confidence – most likely in return for generous discounts. And it stayed true to that despite the repeated delays in the 737-Max certification in February 2020. Walsh said back then that IAG was still «fully committed» to the order, even though the final decision lay with his successor Luis Gallego, who was supposed to become CEO of IAG this spring.

However, the situation has changed significantly since then. Europe’s aviation industry is mostly grounded due to the corona pandemic, as are the fleets of IAG airlines. Willie Walsh has therefore decided to stay on as CEO until the crisis is over. While he continues to lead the aviation giant, his designated successor Luis Gallego will remain head of Iberia for now. In view of the crisis, British Airways alone is likely to cut 12,000 of its 42,000 jobs.

British Airways’ Max were to go to Gatwick

The planned cuts also mean an uncertain future for British Airways’ base at London Gatwick airport. «Our Gatwick and London City operations are now closed and there is no certainty as to when these services can return,» the airline wrote to trade unionists last week. Cabin crews at Gatwick alone are to lose around 1100 of their 1900 jobs.

This is significant in connection with the Boeing 737 Max. Should Gatwick become a much smaller base, less planes would be needed. The aircraft could be used at Vueling, Level as well as British Airways at Gatwick airport, Walsh had said in an aeroTELEGRAPH interview. After the signing of the letter of intent, the company confirmed its intention. IAG did not explain which airline would get how many jets.

Orders with Airbus still open

Of course, IAG could also use the 737 Max intended for Gatwick at other airports and with other airlines. But: «It would make less sense for Iberia and Aer Lingus,» Walsh said to aeroTELEGRAPH last June. The company still has time, though: deliveries were previously planned for 2023 to 2025. Nevertheless, with the current state of the industry and expectations that airlines will be much smaller after the crisis, it is questionable whether IAG is still willing and able to take all 200 jets.

At the end of March IAG had open orders for 29 Airbus A320 Neo (ten for British Airways, nine for Iberia and ten for Vueling) and 39 Airbus A321 Neo (four for British Airways, 15 for Iberia, 14 for Vueling and six for Aer Lingus). However, the company has expressed its unhappiness with the delays of the European aircraft manufacturer. With Boeing, only Air Europa, newly acquired by IAG, has an open order for 20 737 Max.