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Boeing Co.’s order stockpile shrank further last month as airlines and lessors backed out of commitments for the grounded 737 Max jetliner in a market devastated by the coronavirus pandemic.
The planemaker recorded 60 Max cancellations in June, including 47 that already had been announced, according to data posted on the company’s website July 14. The tally didn’t include Norwegian Air Shuttle ASA’s move to scrap all 97 of its remaining Boeing jets on order, since those deals haven’t yet officially been terminated. Boeing’s orders in peril from customers in poor financial health and those intent on revising contracts rose by 123 last month.
The unprecedented collapse in travel demand has complicated Boeing’s efforts to shore up the Max, a critical source of cash. The Chicago-based planemaker faces a long, slow comeback for the best-selling plane once regulators end a flying ban imposed in March 2019 after two fatal crashes. So far, about 2,480 deliveries of the Max have been postponed by at least a year due to disrupted production, according to Bank of America Corp. analyst Ron Epstein.
“Once the aircraft is cleared to fly, the demand outlook for the product is uncertain,” Epstein said in a July 9 report, noting that the Max is “strategically disadvantaged” compared with its Airbus SE counterpart, the A320neo.
“When demand returns to commercial aerospace, we expect operators to choose the untainted program first, before opting to order a Max,” Epstein said.
Aircraft lessors have been working with Boeing to pare speculative orders, spurring a big chunk of recent Max cancellations. Avolon Holdings Ltd. dropped 17 aircraft, while BOC Aviation scrubbed a deal for 30.
“We have and will continue to work with our customers on specific timing and adjustment to deliveries,” Boeing Chief Financial Officer Greg Smith said in a statement. The order revisions will help dictate current and future production rates to balance supply and demand.
Net sales for all commercial aircraft have dropped by 323 planes this year — or 784 after including the accounting adjustment for customers in poor financial health and those intent on revising contracts.
Still, there were faint glimmers of good news for Boeing.
The company delivered 10 aircraft in June, including three of its 787 Dreamliners. That’s a slight improvement from the four total shipments Boeing recorded in May, when none of its marquee wide-body jets was sold or delivered.
And while the U.S. planemaker recorded just one gross aircraft order in June — a 767 freighter for FedEx Corp. — Airbus was shut out of new sales for a second consecutive month.
“We continue to closely monitor the commercial marketplace by staying very engaged with our customers around the globe to fully understand short-term and long-term requirements,” Smith said.
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