(Sharecast News) - British Airways parent International Consolidated Airlines Group has reached an agreement with Boeing to order 25 737-8200 and 25 737-10 aircraft, plus 100 options.
IAG said on Thursday that the aircraft will be delivered between 2023 and 2027 and can be used by any airline in the group for fleet replacement.
The FTSE 100-listed firm noted that the order remained subject to shareholder approval.
Chief executive Luis Gallego said: "The addition of new Boeing 737s is an important part of IAG's short-haul fleet renewal. These latest-generation aircraft are more fuel-efficient than those they will replace and in line with our commitment to achieving net-zero carbon emissions by 2050."
Hargreaves Lansdown's Susannah Streeter said the deal was a sign that airlines were "finally flying into calmer skies" as pent up demand begins to translate into higher bookings.
IAG, which was originally expected to place an order for 200 aircraft, sees seat sales growing, most notably on short-haul routes, making renewing its fleet a priority.
"But with high levels of debt weighing on the balance sheet, it's taking a more cautious approach, scaling down the initial planned order, but with the potential of more to come as conditions improve," said Streeter.
"This caution will mean that aircraft manufacturers like Boeing may be among the last to move on from the pandemic, because airlines need the cash rolling in and the confidence that the passenger demand will stay strong before they will sign on the dotted line for bigger orders."
As of 1130 BST, IAG shares were down 1.77% at 121.76p.
Reporting by Iain Gilbert at Sharecast.com
International Airlines (IAG)