British tour operator TUI Travel Plc (TT.L) Friday announced that it intends to purchase 60 narrow-body Boeing 737 MAX aircraft from Boeing Co. (BA) at current list prices of $6.09 billion or 4 billion pounds.
The company said it has the option and right to buy up to a further 60 Boeing 737 MAX aircraft on the same terms as the committed 60 aircraft. The firm has been offered the right to purchase a further 30 Boeing 737 MAX aircraft on terms to be determined at the time of exercising this purchase right.
TUI Travel noted that the investment is made as part of its fleet renewal strategy and its step to 'Modern Mainstream', as this will result in continued benefits of a modern, fuel-efficient and cost-effective aircraft fleet.
Peter Long, chief executive of the company stated, "A major part of TUI Travel's strategy is to provide our customers with unique holiday experiences they can only get from us. This multi-billion pound investment in the B737 MAX - representing the future generation of more fuel-efficient aircraft for our short and medium-haul programmes - will be a further driver in delivering this."
The firm said it has secured a significant discount to the list price of each aircraft through various concessions, allowances and support from Boeing.
The delivery period for the 60 committed aircraft will start in January 2018 and run until March 2023. However, the company said the deal is subject to shareholder approval.
According to TUI Travel, 40 of these aircraft will be Boeing 737 MAX-8 variant and 20 will be Boeing 737 MAX-9 variant. The 737 MAX-9 variant will have about 10 percent more seat capacity than the 737 MAX-8.
Boeing 737 MAX aircraft will be powered by LEAP-1B engines manufactured by CFM International. The Group will also be required to purchase eight spare LEAP-1B engines from CFM to support the committed 60 aircraft at an aggregated list price of $104 million or 68.7 million pounds.
It also said that the engine type from CFM will have a 13 percent improvement in fuel efficiency and a 40 percent noise reduction over today's main competitors.
TUI Travel owns and operates six European airlines across its Mainstream Sector - Thomson Airways, TUIfly, TUIfly Nordic, ArkeFly, Jetairfly and Corsair - with 141 aircraft in aggregate. Five of these airlines operate 114 narrow-body aircraft and serve short and medium-haul destinations, the firm noted.
TT.L is currently trading at 357 pence, down 6 pence or 1.65 percent on the LSE.
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