Lion Air to buy 60 aircraft from Boeing
Lion Air to buy 60 aircraft from Boeing
Reiner Simanjuntak, The Jakarta Post, Washington
In a bold move, the country's largest budget carrier PT Lion Mentari Airline is expected to purchase 60 aircraft from the Boeing Co. worth US$3.9 billion, with the signing of the deal slated to take place in Washington on Thursday.
With President Susilo Bambang Yudhoyono scheduled to witness the signing of the MOU between the two companies, the deal will allow for the first delivery in July 2007, Lion president Rusdi Kirana said in Washington.
"The last delivery is expected to take place in 2012," Rusdi said, adding that the aircraft involved were Boeing 737-800s and 737-900s.
No explanations were given as to where the funding would come from, but Rusdi hinted that the deal would be funded mostly from the company's internal reserves, with the support of bank loans and a consortium of companies.
The purchase will boost the company's fleet to 94 planes.
Lion's move comes at a time when the nation's airline industry is facing tougher competition, not only among the domestic players but also from the region, with some airlines -- including national flag carrier PT Garuda Indonesia -- forced to reduce flight routes to survive.
High oil prices have also increased costs in the industry.
Rusdi said the deal would provide the company with the strength to focus on taking a bigger slice of the region's already-crowded budget airline industry.
The airline has said that it plans to fly to Bangkok, and several cities in India and Australia after the purchase of larger aircraft.
At present, the carrier flies to more than 50 cities across the country, as well as Singapore, Vietnam's Hanoi and Malaysia's Kuala Lumpur and Penang.
The list price of a 737, depending on which of four models is selected, ranges from $44 million to $74 million, excluding discounts usually given to airline customers for large orders, according to Bloomberg.
A Boeing 737-900, the most expensive version, seats 177 passengers in two classes.
Lion spokesman Hasyim Arsal Alhabsyi told AFP that the company had actually considered an offer from Airbus but decided to sign with Boeing because the airline's support crew would find it easier to accommodate the new aircraft alongside its existing Boeings.
Most of Lion's current fleet of 34 planes were built by Macdonnell-Douglas -- a Boeing subsidiary.
"We have had bids from both sides but Boeing has won," he said, adding that the company has ruled out any future Airbus purchases.