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The Max recertification process, which took more than a year longer than Boeing (BA) initially hoped for, should be “completed within the next few days,” according to a statement released Monday by FAA administrator Steve Dickson.
Boeing announced on Tuesday that it had not received any new orders for any of its commercial jets in October and that customers had canceled 12 existing orders for the Max.
The company also removed 25 Max orders from its order backlog due to the uncertainty that any carrier would buy them.
So far this year, Boeing has seen 460 canceled orders, and it now classifies an additional 846 orders as too uncertain to count in its backlog. Almost all of those lost or uncertain orders were for the Max.
Long delay in getting the Max back in the air allowed customers to cancel their orders without the typical penalty, said Richard Aboulafia, aerospace analyst for the Teal Group. It also puts airlines in a strong position to renegotiate the prices of their current orders, he said, or any future purchases.
Virtually no Boeing deliveries have been made to its passenger airline customers in October. Boeing gets most of a customer’s money to close a sale.
Of the 13 commercial planes delivered in October, only five were passenger planes, with the rest being cargo or military versions of its passenger planes. In the past six months, it has delivered just 29 passenger planes, up from 126 in the same period a year ago.
Airlines are trying to hold onto and raise their own money during the current crisis, rather than taking delivery of new planes they don’t need given their very tight schedules. For example, American Airlines (AAL) said on Tuesday it would sell 38.5 million shares to raise cash, as several other airlines have already done.
Boeing has built 450 of the 737 Max jets since the grounding, in long-standing anticipation of filling orders, but cash-strapped airlines canceled many of those orders.
Thus, an undisclosed number of Max jets will have to be “re-marketed” to other carriers, Boeing CFO Greg Smith said during the latest investor call. Smith did not say how many completed planes did not have a buyer but said new customers had to be found and possibly reconfiguring some jets will delay some deliveries until 2023.
Bloomberg reported on Monday that South West (LUV), which owns 34 Max jets, more than any other airline, is in negotiations with Boeing to purchase some of these unallocated and completed jets. Neither Boeing nor Southwest commented on the report.
Reports that a Covid-19 vaccine may soon be available raised hopes of a rebound in travel. Boeing shares closed 13.7% higher Monday on the vaccines report and were about 5% higher as of late Tuesday despite weak orders and deliveries.
JPMorgan Chase analyst Seth Seifman raised his price target for Boeing shares to $ 190 from $ 155 early Tuesday. But it kept its rating neutral and the new target price was only slightly above Tuesday’s market price.
– CNN’s Pete Muntean contributed to this report
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