MAX Update - Curt Lewis

 

Boeing wins zero new orders, delivers few jets and sees 737 MAX backlog shrink October brought no relief for Boeing’s commercial airplane business. It won zero new sales, had to remove an additional 37 MAXs from the order backlog and delivered just 13 jets. Boeing’s struggles in October contrast sharply with a surge in jet deliveries and a small uptick in orders at rival Airbus. Airbus won 11 new orders and delivered a total of 72 aircraft in October. Even with approval for the 737 MAX to fly again expected by year’s end, the order book for that plane continues to shrink. Boeing outright canceled a dozen orders for 737 MAXs last month. It also removed an additional 25 of those aircraft from the official backlog as no longer certain to be fulfilled. Such removals from the order book are required by accounting standards when either the credit quality of an airline has lowered to a point where it may no longer be able to pay for the jets, or because the delay in delivering the airplane, under the terms of the contract, makes a cancellation possible. So far this year, Boeing has removed 595 now-dubious MAX orders from the backlog and outright canceled a further 448, for a total order reduction of 1,043 MAXS. As a result, the 737 MAX backlog as of Oct. 30 fell to 3,320 jets. The backlog for Airbus’ rival A320neo family is 5,956 jets. Boeing’s net order tally for the year, after all the MAX subtractions, is negative 1,020 airplanes. Airbus’s net order total for the year is 308 aircraft. Boeing’s overall order backlog for all models is 4,275 airplanes. The Airbus total backlog is 7,377 airplanes. Inventory swells, deliveries stall The pandemic has forced a huge drop in demand for airplanes, and international travel restrictions are hampering some of the few airlines willing to pick up a jet. In addition, Boeing deliveries continue to be slowed by the need for inspections and rework on 787 Dreamliners following discovery of quality defects in the aft fuselage section built in North Charleston, South Carolina. On the quarterly earnings call at the end of last month, Chief Financial Officer and Executive Vice President Greg Smith said delivery of the “large number of undelivered 787 aircraft in inventory … has been and is expected to remain relatively slow” because of the inspections and rework. As for the 737 MAX, Boeing hasn’t been able to deliver any since the jet was grounded in March 2019. Boeing’s October deliveries included six widebody freighter jets — one 747, two 767s and three 777s — plus a 767 tanker that will be modified into a KC-46 for the Air Force and a P-8 anti-submarine 737 for the Navy. It delivered just five passenger jets last month: a large 777-300ER bought by Dubai-based lessor Novus Capital and destined for British Airways, and four midsize 787s, which went to American Airlines, Irish lessor AerCap, Saudi Arabian Airlines and Etihad of Abu Dhabi. Airbus deliveries included 55 single-aisle passenger jets: 12 A220s (the former Bombardier CSeries aircraft) and 43 A320 family jets. The European jet maker also delivered 17 widebody passenger jets: four midsize A330s, 12 large A350s and one A380 superjumbo jet.

Southwest is reportedly looking to acquire up to 30 Boeing 737 Max jets even though many travelers say they don't want to fly on the troubled plane Southwest Airlines is in talks with Boeing to purchase more 737 Max aircraft, Bloomberg is reporting.  The low-cost airline is reportedly looking at aircraft that have been built but not delivered due to order cancellations, known as "white tail" aircraft. The ill-fated aircraft has been grounded since March 2019 following two fatal crashes. Up to 30 aircraft may soon be joining Southwest's fleet as the aircraft prepares for its return to the skies after a near 2-year grounding. Its return to the skies could be soon, as sources told Reuters on Monday that final approval for the 737 Max's ungrounding could come as early as November 18. The aircraft Southwest is looking at are known as "white tails" as they were built but never delivered thanks to canceled orders by carriers in the wake of the aircraft's grounding and the coronavirus pandemic.  Air Canada, for example, just canceled 10 orders, announced in its most recent earnings report, thanks to the pandemic.  Southwest, the country's largest low-cost carrier, was an early adopter of the Boeing aircraft that was slated to continue the best-selling Boeing 737 family that first flew in the 1960s. The cost savings offered by the aircraft with minimal additional training for pilots made it a perfect fit for the airline, especially on its longer routes.  In 2019, however, the Max program came to a halt as aviation regulators around the world grounded the plane. Southwest, along with American Airlines and United Airlines in the US, was forced to ground the aircraft at its expense and warm-weather boneyards across the country quickly filled up with new arrivals.  Over 50% of Americans said in a March 2019 poll by Business Insider that they would not want to fly on a 737 Max and airlines are expected to allow free changes for passengers booked on the aircraft in they're uncomfortable. Southwest had publicly stated its desire for a smaller next-generation aircraft, such as the Boeing 737 Max 7, according to The Points Guy. The airline even hinted at the Airbus A220 as a potential addition to the fleet, which may have been a bargaining ploy to get Boeing to offer a better deal on the white-tailed Max aircraft.  A recent earnings report revealed a $1.2 billion loss for the third-quarter but Southwest is expected to recover quicker than the big three international airlines thanks to its leisure-focused route network. October saw Southwest add 19 new routes across the country and announce an expansion to major airports in Chicago, Houston, Miami, uncharted territory for an airline that prefers the smaller airports in those cities. Boeing had been working on a fix for the jet since its grounding and flew successful test flights with regulators in September. Airlines are expecting to fly it in the next few months, subject to final approval from the Federal Aviation Administration and global aviation regulators.  American Airlines has the aircraft in its schedule for as soon as December 29, according to Cirium data, flying between New York and Miami. Anticipating a strong customer reaction upon its return to service, the airline is planning tours of the aircraft where passengers can chat with pilots and maintenance staff. A Southwest spokesperson told Business Insider in a statement: "We have nothing new to share regarding fleet plans. We've publicly shared that Southwest is working with Boeing to refresh our order book." Boeing declined to comment.