By DAVID KOENIG
Wednesday, April 10, 2019
DALLAS -- Boeing Co. failed to win any orders for its 737 Max airliner in March as scrutiny of the plane increased after a second deadly crash in less than five months.
Deliveries of finished Max jets also tumbled, to 11 from 26 in February. That was not surprising - Boeing suspended deliveries in mid-March after regulators around the world ordered the plane grounded.
Boeing's report Tuesday on orders and deliveries came just three days after the company announced that it will cut production of 737s from 52 a month to 42.
Meanwhile, airlines that own the nearly 400 grounded Max jets are cancelling flights.
The damage to Boeing could be temporary, however, if the company can complete a fix to key software on the Max and reassure regulators and passengers that it is a safe plane.
Many analysts believe the deliveries will only be delayed, not lost forever, unless airlines cancel orders for the plane.
The figures on March orders and deliveries are "secondary to getting the Max fix approved and its grounding lifted," Cowen aircraft analyst Cai von Rumohr said.
The plane was grounded when an Ethiopian Airlines Max crashed March 10, less than five months after a Lion Air Max plunged into the sea off the coast of Indonesia. In all, 346 people died.
Boeing has acknowledged that in each crash, a faulty sensor triggered an antistall system when it wasn't needed, pushing the plane's nose down. Pilots on each flight fought unsuccessfully to regain control, according to flight data retrieved from the planes.
The company is still working on the software update, which was delayed recently by several weeks because of the discovery of a second software problem.
Boeing hasn't described the second issue, but says it is not related to the anti-stall system.
Goldman Sachs said it does not expect Boeing to deliver any Maxs in the second quarter and said it was difficult to expect Max orders at the upcoming Paris Air Show in June.
It is still unclear when the Max jets will fly again, with global regulators including China saying they would join a U.S. Federal Aviation Administration panel to review the aircraft's safety.
"A fix and removal of the grounding prior to September 2019 could be perceived positively," Jefferies analyst Sheila Kahyaoglu told Reuters, noting that fresh scrutiny of the certification process could potentially filter into Boeing's 777X program.
Boeing's shares, which have lost about 13 per cent since the crash, closed on Tuesday at US$369.04, down US$5.67.
The latest variant of Boeing's 737 family, which makes up the bulk of its narrow-body production, has been viewed as the likely workhorse for global airlines for decades and central to Boeing's long-running battle against Airbus.
Boeing said last week it would cut monthly 737 Max production by 20 per cent starting mid-April, without giving an end-date.
The company had been increasing Max deliveries before the grounding, with the planes accounting for nearly half of its deliveries in the past few months.
There were more than 300 Max jetliners in operation at the time of the fatal Lion Air crash last October, and about 4,600 more on order.
So far, most of Wall Street and Boeing's airline customers have publicly stood behind the company during its crisis. Boeing hasn't disclosed any lost orders, although Garuda Indonesia has said it will cancel an order for 49 Max jets.
Boeing has a backlog of about 4,600 orders for the plane.
Delta Air Lines neither owns nor has any orders for the Max - most of its pending orders are with Boeing's rival, Airbus.
But Delta chief executive Ed Bastian said he remains confident in Boeing's technological prowess and is interested if Boeing decides to build a new plane bigger than the 737.
"I am confident that Boeing will solve this issue" with the Max, he said. "I expect that to be a hiccup."
Airlines that own the Max, however, are paying a price.
On Tuesday, American Airlines cut a key revenue estimate after cancelling 1,200 flights in the first quarter due to the grounding of its 24 Max jets.
American, the world's biggest airline, said that it can't predict the future financial fallout until it knows how long the jets will be parked and the circumstances under which they will be allowed to fly again.
Over the weekend, American removed the plane from its schedule for an additional six weeks, through June 5.
Associated Press with files from Reuters
Boeing said last week it would cut its monthly production of its 737 Max jets by 20 per cent starting mid-April, but has yet to provide an end-date.
TED S. WARREN/ ASSOCIATED PRESS
Friday, April 12, 2019