Iberia, Aer Lingus and British Airways parent company International Airlines Group (IAG) has announced its intention to buy 200 Boeing 737 MAX jets.

The letter of intent (LoI) signed by IAG and Boeing is subject to a formal agreement. The value of the deal exceeds $24bn at list prices.

Boeing would deliver the combination of 737-8 and 737-10 aircraft, powered by CFM Leap engines, between 2023 and 2027.

The 737 MAX 8 can accommodate up to 178 passengers in a two-class configuration while the larger 737 MAX 10 jet seats about 230 passengers.

With a single-aisle fleet that currently includes almost exclusively of Airbus A320 family aircraft, IAG said it is turning to the 737 MAX as part of diversifying its future fleet to spur competition.

IAG chief executive Willie Walsh said: “We’re very pleased to sign this letter of intent with Boeing and are certain that these aircraft will be a great addition to IAG’s short-haul fleet.

“We have every confidence in Boeing and expect that the aircraft will make a successful return to service in the coming months having received approval from the regulators.”

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The aircraft is expected to be used by several of IAG’s airlines, including Vueling, LEVEL and British Airways, at London Gatwick Airport.

Boeing Commercial Airplanes president and CEO Kevin McAllister said: “We are delighted that the IAG team recognised the superior qualities of the 737 MAX and has indicated an intention to return to the Boeing 737 family. We look forward to building on our long-standing partnership with IAG for many years to come.”

Boeing said the 737 MAX is 14% more fuel-efficient than the existing most efficient next-generation 737s, and 20% better than the original next-generation 737s when they entered service.

IAG’s deal is the first sale of Boeing 737 Max jets since their fatal crashes in Ethiopia and Indonesia.