Thursday, 9 Jul 2020

737 MAX Order Cancellations Continue to Cause Trouble for Boeing

While the reputation of the now-infamous Boeing 737 MAX model aircraft—whose onboard system malfunctions caused fatal crashes in October 2018 and March 2019—might’ve seemed have to hit rock bottom last year, the first few months of 2020 don’t appear to be going any better.

Boeing has just reported that it received more cancellations of its commercial aircraft orders than new-purchase orders during the month of February, heralding more trouble for the manufacturer whose previously best-selling plane model has been grounded worldwide for a year now.

According to CNBC reports, Boeing stated that Air Canada canceled eleven MAX requisitions, while some of its other clients opted to convert their existing orders to larger, widebody aircraft models; such as aircraft leasing firm, Air Lease, which converted its order for nine MAX planes into a call for three 787s and Oman Air, which changed its order for ten MAXes into four 787s.

Such cancellations saw Boeing’s monthly orders summary drop into the red last month in a poor follow-up to the month of January 2020, during which it received zero orders for new planes, further compounding its current financial issues. The Chicago-based, aviation-industry giant received eighteen new orders in February, but also logged a total of 46 cancellations, meaning that it lost 28 monthly orders overall.

Taken as a whole, 2019 marked the first instance in decades in which the company recorded a negative overall order total for the year, as customers canceled or converted their orders. Reuters reported that analysts last year estimated Boeing to be hemorrhaging around $1 billion monthly as a result of the MAX grounding, which was instituted globally in March 2019.

Now, faced with the added problem of coronavirus-fueled market volatility, the plane-maker is drawing upon funds from a $13-billion loan, which it secured in January 2020, backed by over a dozen banks, to see it through these evolving crises.

Despite these challenges and some newly-uncovered issues being revealed about the 737 MAX, Boeing is reportedly standing by its expectations that the MAX will be recertified and the grounding order lifted by regulators by mid-2020.

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