Boeing nears deal to sell 777X jets to Korean Air, sources say

(Reuters) -Boeing Co is closing in on a potential sale of about two dozen 777X jets to Korean Air in a deal worth about $4 billion to $6 billion that could be finalized as early as July’s Farnborough Airshow , industry sources said.

South Korea’s biggest airline has been in talks about a possible return to its traditional supplier of long-haul aircraft for months, after placing a surprise order for 33 A350 jets from Boeing’s European rival Airbus in March.

The sources said the potential new order could involve 20 to 30 777X aircraft, which are worth about $198 million each after typical market discounts, according to Cirium Ascend’s estimated delivery prices.

“We are discussing with the manufacturers, but nothing has been confirmed yet,” said an airline spokesperson.

Boeing said it does not comment on trade discussions and referred any questions about Korea’s intentions to the airline.

The fleet overhaul comes as Korea plans to buy nearly two-thirds of smaller domestic rival Asiana for about $1.4 billion. The European Union approved the partnership in February and the airline has indicated that it expects US approval by the end of October. Following Europe’s Airbus push, Reuters reported in April that Korean was also discussing a new order from Boeing focused on the 777X, an upgrade of the 777 mini-jumbo.

Asked in April about Boeing’s ongoing corporate crisis, Korean Air President Walter Cho told CNBC that Korean was a “satisfied customer with their 777s and that’s what I’m seeing now.”

In June, Cho told Bloomberg News that the airline was weighing the choice between the smaller Boeing 787 or larger A350. Since then, talks about a possible deal with Boeing have once again focused primarily on the 777X, industry sources said. Details still need to be worked out and there is no guarantee that negotiations will be completed by the July 22-26 air show in Britain.

The 777X is the industry’s largest twin-engine jet, with around 400 seats, but its entry into service has been delayed for five years due to problems including certification delays. An order for the delayed 777X would be a boost for Boeing, although Farnborough is not expected to produce a large number of orders for manufacturers this year, industry analysts said.

(Reporting by Allison Lampert, Lisa Barrington, Tim Hepher; Editing by Richard Chang and Matthew Lewis)