€12bn of cancelled Boeings to skew US Ireland trade data

Lessors AerCap and Avolon pull out of deals for Max aircraft

BILLIONS of dollars in cancelled aircraft orders by Irish lessors for Boeing’s Max jets look set to skew Ireland’s US trade balance further in this country’s favour.

Just two Irish-headquartered lessors – AerCap and Avolon – have between them cancelled about $14.3bn (€12.1bn) worth of Max orders so far this year according to calculations by the Irish Independent based on publicly available data.

The Central Statistics Office (CSO) data shows a drop of almost 50pc in the value of aircraft imports between January and the start of June – to €3.88bn this year from €7.92bn in 2019.

The US and France are the main exporters of planes to Ireland, through Boeing and Airbus respectively.

The cancellation of orders for Boeing will further skew

Irish-US trade figures in Ireland’s favour with potential political implications, according to Dan O’Brien, chief economist at the Institute of International and European Affairs (IIEA).

“The drop in aircraft purchases, traditionally Ireland’s biggest import from the US, will widen further the Republic’s already large trade surplus with that country. As US president Donald Trump has repeatedly criticised such imbalances, Ireland could attract more unwanted attention from Washington DC, particularly if the incumbent were to win re-election in November’s presidential election,” he said.

Boeing said this week that 43 orders for its 737 Max aircraft were cancelled in July by buyers around the world. That included 15 Max cancellations by AerCap during the month.

The Max jets have been grounded since March last year, following two deadly crashes that claimed 346 lives. Its return to service has taken longer than anticipated and has involved Boeing being forced to make a number of alterations to the aircraft’s systems and controls.

AerCap placed an order in 2015 for 100 Max 8 variants, which each have a list price of almost $122m (€103m). The true size of sales is opaque because bigger orders traditionally attract chunky discounts from Boeing.

The lessor, headed by CEO Gus Kelly, is one of the world’s biggest and has retained the balance of its Max order.

The cancellations last month brought the total number of orders for the Max that have been shelved to 416 this year. Some cancellations have involved buyers converting orders to a different Boeing jet model.

Surplus could attract more unwanted attention from Donald Trump

Ryanair has stood by Boeing, keeping its orders worth €5bn

Avolon, whose CEO is Domhnal Slattery, cancelled 75 Max orders in April and another 27 in July.

It’s also one of the world’s major aircraft lessors and placed an order for 75 Max 8 aircraft in 2017. That was Avolon’s single largest order with the US plane maker.

Those 102 cancelled jets have a combined list price of about $12.4bn.

Ryanair is also one of the biggest buyers of the Max.

The airline has stood by the plane maker, with orders for up to 210 Max jets. A Ryanair filing to the US Securities and Exchange Commission (SEC) showed firm orders for the Max worth €5.1bn over five years from March 2020.

Those planes are still on order but deliveries are delayed which will skew trade data further.

Investment banking company Jefferies said in an equity research note yesterday that Boeing now has a backlog of 4,129 Max orders.

It has predicted that deliveries will restart in the first quarter of 2021.