U

S President Barack Obama witnessed the signing of an agreement that saw Lion Air, Indonesia’s largest private airline, order 230 aircraft from Boeing, making it the US aircraft manufacturer’s largest commercial order.

“If I’m not mistaken this represents the largest deal that Boeing has ever done. We are looking at over 200 planes that are going to be sold,” Obama said after the signing, on the sidelines of the East Asia Summit on Friday.

The deal, which is worth US$21.7 billion, includes the purchase by Lion Air of 201 Boeing 737 MAX and 29 Next Generation 737 ER aircraft.

It also takes Lion Air’s orders to more than 400 planes, which they aim to fly across the Asia-Pacific region amid robust passenger growth, despite the instability of the global economy.

The deal includes an option to purchase another 150 aircraft valued at US$14 billion, bringing the potential total value to US$35 billion.

“We’re proud that Lion Air picked the 737 once again, building on our successful partnership,” Jim Albaugh, Boeing Commercial Airplanes president and CEO said.

“Lion Air was a leader when it was the launch customer for the 737-900ER in 2005 and today it continues to be a leader as the first airline in Asia to commit to the 737 MAX.”

Rusdi Kirana, Lion Air founder and president director, said the 737 MAX will be the future of Lion Air.

“The highly efficient, technologically advanced airplane will help Lion Air continue to bring low fares and allow us to open new destinations because of the longer range of the aircraft,” he said.

The deal for 201 of Boeing’s updated 737 MAX planes and 29 Next-Generation 737-900 extended range planes will be financed in part by the US Exim Bank, Lion Air director Edward Sirait told Reuters.

The rest will come from a consortium of international banks, which is still being finalized. The aircraft will be delivered between 2017-2025.

Lion Air plans an initial public offering next year to raise more than US$1 billion through the sale of a 20-30 percent stake, to help finance its rapid expansion. It aims to fly to China, India, South Korea, Japan and Australia.

Much of the growth in Asia’s air travel industry has been driven by budget carriers, but Lion Air plans to use the blueprint of regional leader AirAsia and set up a premium airline too.

PT Space Jet is expected to launch in a year’s time.

Lion Air operates 92 planes and has a load factor of over 80 percent. The latest order comes on top of a US$14 billion deal signed in 2008 with Boeing for 178 737-900s, which will be delivered in stages until 2016.

The Central Statistic Agency (BPS) recorded that the number of air passengers in Indonesia had jumped 22 percent from 43 million in 2009 to 53 million in 2010.

With the rapid increase in aircraft passengers over the past decade, Indonesia is home to around 50 airline operators.