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Boeing delivers its first 737 Max 8 to Malindo Air

The aircraft manufacturer has made one customer happy by delivering its first long-anticipated 737 Max 8.

Malindo Air, a Malaysian airline and subsidiary of the Lion Air Group, celebrated its new aircraft noting the important role it will play in reducing air fares to customers.

Boeing quietly delivered the new single-aisle 737 Max 8 to its customer in Seattle. Avolon, the aircraft leasing company that has played a large role in leasing Boeing’s 737 Max models, said that airlines operating the new aircraft will see 14% fuel burn improvement and an 8% operating cost per seat advantage over other aircraft. It is the first of what is planned to be 3,700 deliveries.

The release came shortly after Boeing suspended test flights of the 737 Max. Aircraft engine manufacturer CFM International – a joint venture of Safran and General Electric –  informed Boeing that the plane’s Leap-1B engines could have a manufacturing error. CFM’s supplier for low pressure turbine rotor discs had apparently delivered defective parts. Boeing shortly resumed some 737 Max 8 flight tests, however. Regulators cleared the planes on the condition that spare engines not featuring the possibly defective component would power them.

Boeing is introducing up to five Max models, including the Max 8, the Max 9 and the Max 10X (beginning construction for the Max 7).

We are yet to see the Max’s impact on the single-aisle market, which the longer Airbus A321neo currently dominates.  The delays with the Leap-1B engines certainly did not help, and any further obstacles could damage the prospects of its single-aisle planes. The A320neo line up have about 5,000 sales compared to the 3,700 orders for the 737 Max. Air Lease Corp further worry that Boeing’s Max 10X will be a latecomer into the market. The planned 2020 release will be one year after the planned debut of Airbus’ new planned model, built to fit 20 more people than the Max 10X.

It is also a tough market generally. The industry is concerned that aerospace is entering a downturn after many years of growth.

Nevertheless, the Max is a critical source of revenue for Boeing. George Ferguson of Bloomberg Intelligence bluntly commented that “it is the cash generator and they can’t screw it up”.

If their timetable goes to plan, Boeing are to expect $25 billion in revenue in 2017. Southwest Airlines and Norwegian Air are the next in line to get their share of 737 Maxes.