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February Wave of 737 MAX Cancellations Hits Boeing
Chicago-based Boeing’s net sales for 2020 currently sits at 28 aircraft cancellations. The airline recorded its first orders of the year in February following a quiet January. BBAM announced an order for three converted 737-800 freighters and two weeks later All Nippon Airways (ANA) committed to a firm order for 15 Boeing 787 Dreamliners, with options for five more.
Despite logging 18 orders during the month, Boeing saw 41 Boeing 737 MAX cancellations from a global range of customers. Air Canada currently has 24 MAX aircraft grounded as a result of two 737 MAX 8 fatal crashes in Oct. 2018 and March 2019. The airline announced it had canceled 11 orders for the aircraft on March 11, worth $1.3 billion at list price. Despite the cancellations, Canada’s flag carrier still has 26 of the aircraft type on order.
Air Lease Corporation (ALC) also retracted nine 737 MAX aircraft from its order in February. The Los Angeles-based aircraft leasing company has ordered 150 of the aircraft type and already canceled 18 orders for the grounded jet in 2019. Despite 27 total cancellations, Reuters reported in January that the customer remains confident in the 737 MAX.
Chief Financial Officer Greg Willis told Reuters in January: “We are watching the situation, which is still very much evolving, but as we look out there are 7,000 737s that need to be replaced.”
Oman Air is the first airline in the Middle East to cancel orders for the aircraft type following the grounding. The airline currently has five grounded 737 MAX 8s and five more on order after removing 10 of the aircraft from its orders. Despite being vocal about looking at other aircraft types and the impact the grounding has had on its operations, regional competitor Flydubai has not moved to cancel any orders as Oman Air has.
Japan Investment Adviser (JIA) also canceled 10 orders for the Boeing 737 MAX in February, valued at $1.12 billion. The Tokyo-based leasing company originally committed to purchasing the aircraft type at the 2017 Paris Air Show. A Boeing Business Jet customer also canceled one 737 MAX order in February.
In total, the 737 MAX program has seen 59 aircraft cancellations since the global grounding of the jet last March. Despite the cancellations, Seeking Alpha reports that ALC’s $1.3 billion 737 MAX cancellations were offset by new orders for Boeing 787 aircraft valued slightly higher than the canceled orders. Oman Air also used its 737 MAX cancellations as an opportunity to order additional Dreamliners.
It’s been over a year since the aircraft was grounded by global aviation regulatory bodies and airlines have been forced to adapt to the situation by canceling thousands of flights daily and slashing growth plans for 2020. The COVID-19 pandemic has built further uncertainty for 737 MAX operators around the globe as travel demand suddenly weakened. As a result, more airlines are expected to reduce their orders for an aircraft that currently has a backlog exceeding 4,600 jets.
The aircraft manufacture halted production of the aircraft in early 2020, but in a glimpse of hope for the grounded jet, sources close to the manufacture say Boeing is currently planning to restart production of the 737 MAX by May 2020.
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