Boeing suffers more cancellations of 737 MAX orders

The coronavirus pandemic has depressed travel demand, leading the US to sign a $25bn rescue package with carriers.

    Boeing's 737 MAX aircraft has been grounded since March 2019 after being involved in two fatal crashes [File: David Ryder/Getty Images]
    Boeing's 737 MAX aircraft has been grounded since March 2019 after being involved in two fatal crashes [File: David Ryder/Getty Images]

    Boeing Co has reported another 75 cancellations for its 737 MAX jetliner in March, as the coronavirus crisis weakened travel demand, hurting global airlines and worsening disruptions from the grounding of Boeing's best-selling jet.

    Tuesday's news follows an announcement by the United States Treasury Department that the country's biggest passenger airlines have agreed in principle to a $25bn bailout package.

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    Boeing posted a total of 150 cancellations for the 737 MAX in March, including 75 previously reported from Irish leasing company Avolon. New cancellations came from buyers including 34 of 135 aircraft ordered by Brazil's GOL.

    GOL confirmed the cancellation of the order for 34 planes and said it reached an agreement with Boeing on "cash compensation and changes to future orders and associated payment schedules".

    "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 chief executive Paulo Kakinoff in a statement. GOL now has 95 remaining firm orders for 737 MAX aircraft.

    The cancellations come as Boeing seeks to untangle delivery commitments after halting output of the 737 MAX in January, following delays in returning it to service. The plane has been grounded since March 2019.

    Boeing shares closed down 4.3 percent to $141 after having lost $6.33.

    Airlines have increasingly sought government aid as travel bans to stop the spread of the coronavirus have caused a sharp decline in passengers. While some are hopeful that US passenger traffic, which has dropped by 95 percent due to the coronavirus pandemic, will begin to recover by October, they have warned that the slowdown in air travel could extend into next year and even longer.

    The biggest US carriers will receive 70 percent of US Treasury funds for payroll in cash assistance that will not need to be paid back, while smaller carriers receiving $100m or less will not need to repay any funds.

    The six largest US airlines - American Airlines Group Inc, United Airlines Holdings Inc, Delta Air Lines Inc, Southwest Airlines Co, JetBlue Airways Corp and Alaska Airlines - as well as four other airlines, accepted the support, Treasury said.

    Agreements should be finalised soon and funds disbursed quickly, it said.

    The pandemic has forced US planemaker Boeing and European rival Airbus to cut production in the face of plunging demand, cash problems at airlines and logistical difficulties in delivering aircraft.

    Boeing, facing a 13-month-old freeze on deliveries of the 737 MAX and now disruption to deliveries of larger planes due to the coronavirus epidemic, said it had delivered 50 planes in the first quarter, barely a third of the 149 seen a year earlier.

    That was the lowest since 1984 for the first quarter.

    Boeing posted orders in March for 12 787 Dreamliners, one 767 freighter and 18 pre-MAX versions of the 737 for the P-8 maritime patrol programme. For the first quarter, it posted 49 new orders, or a negative total of 147 after cancellations.

    After further accounting adjustments representing jets ordered in previous years but now unlikely to be delivered, Boeing's adjusted net orders sank to a negative 307 planes.

    Boeing remains in talks with regulators seeking approval to return the plane to service. Last week, Boeing said it was addressing two new software issues with the 737 MAX flight control computer.

    SOURCE: Reuters news agency