Boeing faces further 737 Max cancellations as airlines claw for cash

Published: 16 April 2020 - 5 a.m.

Boeing faces a further 75 order cancellations on its 737 Max by customers desperately trying to conserve cash and adjust to a collapse in travel demand brought on by Covid-19.

The US planemaker had a total of 150 orders for the 737 Max cancelled in March, including 75 from lessor Avolon and most recently 34 from Brazilian airline Gol.

“GOL remains fully committed to the 737 MAX as the core of its fleet and this agreement further enhances our successful long-term partnership with Boeing,” said Gol’s CEO Paulo Kakinoff.

Gol, one of Boeing’s key 737 customers, still has 95 new 737 Max’s on order and remains committed to the purchase for now.

Few airlines expect the demand for travel to rise quickly after the crisis subsides and so are adjusting their fleet sizes accordingly. Most recently EasyJet negotiated with Airbus to defer a substantial order.

Boeing’s Max has been grounded for over a year following two fatal crashes. The manufacturer had hoped to bring the aircraft back into service by the summer but with airlines worldwide grounded and bleeding cash because of Covid-19, the appetite for new jets is slim.

Production of the 737 Max was frozen in January while Boeing focused instead on delivering units. With airlines deferring deliveries, a large number of Max’s are currently in storage.

Boeing delivered just 50 commercial planes in Q1 of 2020, a significant reduction from 149 compared to the same period last year and the lowest number since 1984.

After cancellations, Boeing received a negative total of orders of 147 in the first quarter.

While Boeing is still working to return the Max back to service, the market for new narrow-bodies is likely to be reshaped once the Covid-19 crisis subsides.

With a number of smaller, low-cost airlines expected to fold in the coming months, there could be a glut of second-hand narrow-bodies available on the market.

Boeing’s main rival Airbus has also stripped back production of its narrow-bodies. Its best-selling A320 family had been experiencing huge demand until the virus struck and the manufacturer has now decided to reduce output by a third.

Boeing’s first quarter results will be published on 29 April.

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