TUI Travel picks Boeing for 60-plane order worth $6 billion

Fri May 31, 2013 6:12am EDT
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By Rhys Jones

LONDON (Reuters) - British travel firm TUI Travel agreed to buy 60 mid-range Boeing jets with an option for 90 more, moving to make its fleet more fuel-efficient and delivering the U.S. planemaker a big contract win over European rival Airbus.

The world's largest tour operator, which owns six European airlines including Britain's Thomson Airways, said on Friday the initial order of Boeing BA.N 737 MAX planes was secured at a "significant discount" to the list price of $6.09 billion.

The planes, to be powered by CFM LEAP-1B engines, are scheduled for delivery between January 2018 and March 2023, TUI Travel TT.L said

It said such a large deal would represent a class 1 transaction, meaning it would require shareholder approval.

"TUI Travel have 59 leases on planes expiring over the next three years so the fact they are looking to buy these planes shows the strength of the company," said Oriel Securities analyst Jeffrey Harwood, who added that cutting its fuel bill was a big motivation for the group.

Several European carriers have seen profits battered by high fuel costs - which now account for around half of airlines' operating expenditure - in recent years.

Boeing has said the 737 MAX, which competes with Airbus' EAD.PA A320neo, will burn 13 percent less fuel than current 737 models.

Reuters reported earlier this year that TUI Travel was close to sealing a deal for 60 narrow-body airliners.   Continued...

The Boeing logo is seen at their headquarters in Chicago, April 24, 2013. REUTERS/Jim Young