Boeing Co. lost orders for 150 of its beleaguered 737 Max aircraft last month as travel bookings plunged amid the Covid-19 pandemic, squeezing airlines and aircraft lessors.
Half the cancellations were previously announced by Avolon Holdings Ltd., the world’s No. 3 jet lessor. In addition, Brazil’s Gol Linhas Aereas Inteligentes SA trimmed 34 planes from an earlier deal. Smartwings Slovakia SRO scrapped orders for five aircraft, while unidentified customers opted out of 35 sales of the Max, which has been grounded for more than year after two fatal crashes.
Boeing’s order book for the Max is shrinking as the planemaker works with global regulators to clear its best-selling jetliner to resume commercial flight by midyear. The company couldn’t face worse timing for the comeback effort, as airlines that had until recently clamored for the single-aisle aircraft are now fighting for their financial lives.
“We are working closely with our customers, many of whom are facing significant financial pressures, to review their fleet plans and make adjustments where appropriate,” Boeing said in a statement Tuesday. “At the same time, Boeing continues to adjust its order book to adapt to lower-than-planned 737 Max production in the near term.”
The shares fell 2.3% to $143.90 at 11:31 a.m. in New York after climbing earlier in the session amid a broad market rally. Boeing tumbled 55% this year through Monday, more than doubling the decline of a Standard & Poor’s index of industrial companies.
Boeing suspended output of the Max in January, and plans to slowly restart manufacturing soon to stress-test its supply chain and avoid flooding the market with unneeded planes.
In all, the backlog of 737 orders shrank by 314 jets during the first quarter, according to Boeing’s website. Of those, 191 were sales that were canceled or converted into orders for other Boeing jets. Another 141 were taken off the books under an accounting measure aimed at measuring impaired orders, although the contract remains intact. Also, Boeing won 18 orders for a military version of the 737.
While demand for twin-aisle aircraft has been particularly hard hit as the viral outbreak saps long-range travel demand, Boeing still managed to garner 29 orders for its carbon-fiber 787 Dreamliner during the first quarter. That included 12 firm sales to Japan’s All Nippon Airways last month.
Boeing recorded 49 total orders in the first quarter and 50 deliveries. The Chicago-based company said “logistical challenges” continue to hamper shipments, with customers unable to visit the U.S. to take ownership because of the travel restrictions.
But Boeing’s net orders plunged to minus 307 during the quarter ended March 31. That’s because the company removed 163 sales of all jets from its backlog due to the accounting adjustment, which includes an assessment of a customer’s financial health and contractual rights.
The total order backlog shrank to 5,049 from 5,351 at the end of February.
