Lately, airlines have been on an absolute shopping spree. We’ve seen so many airline orders. According to IATA, carriers are flexing their wallets like they’re in a Black Friday sale at Boeing and Airbus despite the global aircraft shortage.
Some of the biggest recent buys include:
- ANA splashing out on 70 new jets
- EVA Air topping up their Airbus order
- JAL deciding they actually do want the 737 MAX
- Malaysia Airlines locking in a deal for up to 60 aircraft
- Eurowings adding new 737s to the mix (yes, really)
With all this aircraft retail therapy going on, you’ve probably seen terms like MOU and LOI thrown around. If those sound like random aviation alphabet soup, don’t worry, I’ve got you covered. Let’s break it down.
In This Post
MOU vs. LOI: What Do They Actually Mean?
When an airline starts shopping for planes, they don’t just walk into Airbus HQ, point at an A350, and say, “I’ll take five of those.” There’s a whole legal dance involved, and it usually starts with either a Letter of Intent (LOI) or a Memorandum of Understanding (MOU).
Letter of Intent (LOI): The “I’m Serious“ Note
In the aircraft world, an LOI is like a firm handshake. It’s not legally binding, but it shows that an airline is seriously considering buying some jets.
What it does: Lays out the basic terms, aircraft type, number of units, and potential price.
Why it matters: It’s often the last step before an airline signs a formal contract.
Extra spicy detail: LOIs sometimes require a deposit (which may or may not be refundable). So, it’s not just talk; there’s some money on the line.
Memorandum of Understanding (MOU): The Casual “Let’s Talk“ Agreement
An MOU is more like a “We’re interested, but let’s not get ahead of ourselves“ kind of deal. It’s even less binding than an LOI and is often just a public way of saying, “Hey, Airbus/Boeing, we think we like you.”
What it does: Outlines general interest in a deal but lacks specifics.
Why it matters: It signals to the world (and investors) that something might be brewing.
Reality check: Airlines sometimes sign MOUs just to look busy; not all of them turn into actual orders.
Which One Packs More Punch?
Short answer: LOI > MOU.
An LOI is stronger because it’s more detailed, usually involves money, and is a step closer to an actual contract. However, neither an LOI nor an MOU is legally binding; both are just warm-up acts before the Aircraft Purchase Agreement (APA) takes centre stage.
How This All Plays Out in the Real World
Step 1: Airline A signs an MOU with Airbus for 50 A320neos, making headlines but committing to nothing.
Step 2: A few months later, they move forward with an LOI, actually setting terms and showing they mean business.
Step 3: The big one is that an aircraft purchase agreement (APA) is signed, legally locking in the order.
That’s when the champagne (or at least the corporate press releases) starts flowing.
Final Boarding Call: Plane Shopping Isn’t as Simple as It Looks
Airlines orders aren’t like adding a new suitcase to your Amazon cart. It’s a complex, multi-stage process with enough legal jargon to make even the most seasoned av-geek’s head spin. MOUs and LOIs are just the opening act; the real action happens when the ink dries on an Aircraft Purchase Agreement. So next time an airline proudly announces a “massive order,“ take a second look. Is it a serious investment or just a PR stunt? Because in aviation, just like in life, talk is cheap, but aircraft definitely aren’t.
#WingTips – where we decode the fine print of airlines orders so you don’t have to.
