Air Europa renews its agreement with Boeing to renew the fleet for up to 2,500 million | Economy

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Air Europa has signed a new strategic framework agreement with Boeing for the renewal of its fleet starting next year, with the incorporation of the new Boeing 787-9 Dreamliner and Boeing 737 MAX models, the company said in a statement on Monday. Although the airline does not specify the number of devices or the amount of the order, market sources estimate that there will be eight 787 units and five 737 MAX for an amount that can reach 2,500 million euros.

The president of Globalia, Juan José Hidalgo, already advanced on August 17, after the signing with IAG of the agreement by which Iberia’s parent company took 20% of the company, the new agreement reached with Boeing after the suspension of the orders from before the pandemic for the renewal of the fleet with long-haul aircraft.

The airline has explained that the new agreement will make it possible to convert the Boeing 787 Dreamliner and the new Boeing 737 MAX “into the backbone” of its fleet, becoming the first Spanish airline to operate both models. The Boeing 737 MAX, an optimized version of one of the manufacturer’s most successful single-aisle aircraft, will serve you on your short and medium-haul routes, while the 787 Dreamliner is a long-haul model, capable of reducing fuel consumption and emissions. by 20%, as well as noise by 60%. In reality, the agreement announced this Monday is the restructuring of an order for 22 aircraft of these two models to Boeing before the pandemic, whose delivery was suspended after the stoppage of air traffic.

unify the fleet

The company wants to unify its fleet -both owned and leased- around these two Boeing models to save costs, in a similar way to other airlines such as Ryanair that concentrate their offer on a few models from the same manufacturer. In fact, this Monday Air Europa announced another agreement with AerCap Holding, the world’s largest lessor in the aviation sector, for the leasing of 15 new aircraft, five Boeing 787-9 Dreamliners and ten Boeing 737 MAX. The units will start to be delivered in early 2024 and the order will be completed throughout 2026.

Air Europa already revealed last April that it had signed different rental agreements to add up to 11 aircraft throughout this year, all of them Boeing aircraft. These include four 787 Dreamliners from Norse Atlantic Airways, previously owned by Norwegian. The objective is to recover the fleet that, due to the covid-19 pandemic, has gone from 66 to 41 current units.

The company has explained that the expansion of its fleet around Boeing models responds to the notable increase in the demand for seats and the reactivation of the sector after the pandemic. “This has made it possible to recover routes and frequencies with its main destinations around the world, especially in America, and to strengthen its key position in the Madrid-Barajas airport hub”, he pointed out.

Although the firm owned by Globalia has not given any financial details of the contracts signed with the American manufacturer or with AerCap, the renewal of the fleet will impact the airline’s accounts, on which a debt of close to 1,000 million euros weighs. . The main part of this liability is the 475 million euros that Air Europa received from the rescue fund for strategic companies of the State Industrial Participation Company (Sepi), whose term expires in 2026. Likewise, the Hidalgo airline has had to postpone until 2028 the payment of the first package of public aid that it received at the beginning of the pandemic in the form of credit for 140 million euros, guaranteed by the Official Credit Institute (ICO). For the current year, Air Europa has to face the payment of 348 million, of which 250 million correspond to the payment of aircraft leases (lessors).

At the same time, the airline is facing the merger process with Iberia pending the approval of the Competition authorities of the European Union, the outcome of which will not be known until the end of 2023 or the beginning of 2024. A process about which, paradoxically, Hidalgo has shown very little optimism: “A merger of Iberia and Air Europa is not possible because the law prevents it. The law clearly tells you that a company that is not from the European Union cannot have more than 49% of the shareholding of a European airline. IAG, not being European with Brexit, cannot have more than that percentage. It can reach up to 49% if we reach an agreement, but no more”, said the president of Globalia in statements to OK Diario.

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