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.