Boeing loses 150 Max orders in March

AIRLINES CUT BACK

Boeing Co. lost orders for 150 of its beleaguered 737 Max aircraft last month as travel bookings plunged because of the COVID-19 pandemic, squeezing airlines and aircraft lessors.

Half the cancellations were previously announced by Avolon Holdings Ltd., the world’s No. 3 jet lessor. In addition, Brazil’s Gol Linhas Aereas Inteligentes SA trimmed 34 planes from an earlier deal. Smartwings Slovakia SRO scrapped orders for five aircraft, while unidentified customers opted out of 35 sales of the Max, which has been grounded for more than year after two fatal crashes.

The tally, along with results posted by Airbus SE, provide a glimpse of the toll on the manufacturers from a halt to air travel as borders closed, non-critical businesses shuttered and consumers were ordered to head indoors. The International Air Travel Association, an airline trade group, estimated carriers will lose US$314 billion this year because of the outbreak, a 25-per-cent jump from its previous forecast.

While Boeing still has unfilled orders for 5,049 planes, “given COVID-19 pressures, additional deferrals/cancellations are likely in coming months,” Cowen analyst Cai von Rumohr said in a note.

Boeing’s order book for the Max is shrinking as the plane maker works with global regulators to clear its best-selling jetliner to resume commercial flight by mid-year. The company couldn’t face worse timing for the comeback effort, with airlines that until recently had clamoured for the single-aisle aircraft now fighting for their financial lives.

The plane maker suspended output of the Max in January and plans to slowly restart manufacturing soon to stress-test its supply chain and avoid flooding the market with unneeded planes. The long grounding may have an unexpected benefit for some cash-strapped customers. If they exercise a clause that allows them to walk away from an order after a 12-month delay, Boeing is typically obligated to refund any advance payments.

“We are working closely with our customers, many of whom are facing significant financial pressures, to review their fleet plans and make adjustments where appropriate,” Boeing said in a statement Tuesday. “At the same time, Boeing continues to adjust its order book to adapt to lower-than-planned 737 Max production in the near term.”

Boeing shares fell 4.3 per cent to close at US$141.00 in New York erasing gains earlier in the session as the broader market rallied. Boeing tumbled 55 per cent this year through Monday, more than doubling the decline of a Standard & Poor’s index of industrial companies.

In all, the backlog of 737 orders shrank by 314 jets in the first quarter, according to Boeing. Also, Boeing won 18 orders for a military version of the 737.

NICK OXFORD / REUTERS FILES American Airlines planes are parked due to flight reductions made to slow the spread of coronavirus disease (COVID-19), at Tulsa International in Tulsa, Okla. The planes on the right are Boeing 737 Max aircraft, parked since their grounding by regulators over flight safety issues.