TORONTO (Reuters) - Canada’s WestJet Airlines Ltd (WJA.TO) said on Thursday it has reached a preliminary agreement to purchase 65 737 MAX aircraft from Boeing Co (BA.N), moving to expand its fleet with more fuel-efficient aircraft.
The 737 MAX series is due to enter production in 2015, with deliveries to customers starting in 2017. It is the latest version of Boeing’s top-selling 737 jet, which has been in production for more than four decades.
The narrow-body 737 MAX is set to compete with the A320neo made by Airbus EAD.PA. Boeing said in May it expects the craft to burn 13 percent less fuel than current 737 models.
Calgary-based WestJet said it plans to buy 40 of the 737 MAX 8 aircraft and 25 of the smaller 737 MAX 7 planes, with delivery to begin in September 2017. The MAX 8 will accommodate between 162 and 175 passengers, while the MAX 7 will fit 126 to 140 passengers.
WestJet also said that 15 of its existing Next-Generation 737 aircraft orders, currently scheduled for delivery between December 2014 and 2018, will be filled by 737 MAX aircraft instead.
Including the new orders, WestJet’s future Boeing 737 aircraft deliveries total 92. WestJet’s current fleet consists of 103 Boeing Next-Generation 737s and four Bombardier Inc (BBDb.TO) Q400 NextGen aircraft.
WestJet expects to sign a final purchase agreement for the 737 MAX aircraft before the end of September.
The airline said it now expects capital expenditures to range between C$210 million and C$220 million for the third quarter of 2013, and between C$690 million and C$710 million for the full-year. It previously forecast C$100 million to C$110 million for the third quarter and C$610 million to C$630 million for the full year.
WestJet’s move comes as competition among Canadian airlines is heating up, with Air Canada ACb.TO, the country’s largest airline, boosting capacity with the launch of its Rouge airline this summer. Rouge, a low-cost carrier, is aimed at high-volume leisure travel heading to the Caribbean, the United States and other international markets.
WestJet itself recently launched Encore, a regional carrier aimed at competing head-to-head with Air Canada on some routes to smaller cities and towns where Canada’s biggest airline has enjoyed a monopoly.
Reporting by Euan Rocha; Editing by Gerald E. McCormick and John Wallace