Boeing Co. (NYSE: BA) has received a 38 billion yuan ($6.1 billion) commitment from Ruili Airlines, a privately-owned start-up budget Chinese carrier, for the purchase of 60 B737 MAX jets.
The Yunnan-based budget carrier Ruili, according to the official Chinese news agency Xinhua, aims to expand its current fleet of five jets to 56 jets within the decade. Its preferred models – the 737 MAX 7, 8, and 9 – based on Boeing’s website, costs $87.7 million, $106.9 million, and $113.3 million, respectively. Ruili is just a year-old carrier, having received its operating license in February 2014 from the Civil Aviation Administration of China.
A report by Flightglobal says Ruili teamed up with Minsheng Financial Leasing and AVIC Leasing for the purchase of the 60 aircraft. The companies signed the deal with the American aerospace giant Boeing on May 18, said to be the Chinese budget carrier’s first anniversary.
China has become one of the major global aviation markets. The development has largely benefited Boeing as well as its major competitor Airbus. In 2014 alone, Boeing invested over $800 million in China, according to Xinhua. An estimate by the CAPA Center for Aviation last November said around 19 airline operators will launch in the coming months in China, or may have already done so.
Ruili will lease the jets from its deal partners, at half each from Minsheng and AVIC Leasing. Ruili, wholly owned by Chinese conglomerate Yunnan Jincheng Group, is also reportedly mulling to place additional orders for another 12 of these narrow bodies.
Boeing estimated in its market outlook 2014-2033 that over a third of the global deliveries of its jets will be targeted towards the Asia Pacific over the next 20 years. China will spur this growth.
In 2014, Shanghai-based China Eastern Airlines signed a deal with Boeing for 80 jets worth $7.4 million. It was by far the largest order from a Chinese carrier.