Boeing 737 MAX Grounding Hits Jetliner Deliveries -- 2nd Update
By Doug Cameron and Robert Wall
Boeing Co. commercial jetliner deliveries fell by more than a
third in the first half of 2019 from a year earlier as 737 MAX
aircraft continue to pile up at its facilities, with rival Airbus
SE set to overtake its U.S. rival as the world's largest plane
maker for the first time in seven years.
For the third straight month, Chicago-based Boeing on Tuesday
reported no new orders of the MAX aircraft, which have been
grounded since mid-March following two fatal crashes.
Overall, the company shipped 239 planes over the first six
months compared with 378 in the same period last year, with more
than 150 of the grounded MAX jets parked in storage.
Boeing shares fell after the announcement.
It suspended MAX deliveries in March following the crash in
October of one of its jets operated by Lion Air, in Indonesia, and
a second crash, in March in Ethiopia. Similarities between the two
MAX crashes sparked global safety concerns. Boeing's plans to fix
the plane have encountered delays, and the company now hopes to
submit the fix to regulators in September to get the fleet back
into airline service.
Airbus remains on track to deliver a record number of jets this
year after shaking off an array of production problems, with plans
to boost output of its best-selling A320 range this year. Airbus
Tuesday said after European markets closed it had shipped 389
planes in the first six months compared with 303 in the year-prior
Boeing now builds its 737 jets at a rate of 42 a month after
cutting output by almost a fifth in April and shelving its own plan
to boost production. The undelivered planes are draining Boeing's
closely watched cash flow, which analysts expect to turn sharply
negative this year, adding to the pressure to deliver its 787
Dreamliner jets, aircraft services and defense equipment. It handed
over 18 Dreamliners in June.
Airbus, based in Toulouse, France, has promised to build 880 to
890 airliners this year. Deliveries at Airbus are typically
weighted to the second half.
If Airbus hits its full-year target, it is poised to ship more
jets than Boeing for the first time since 2012. Boeing, which had
planned to build as many as 905 airliners this year, has suspended
delivery guidance because of the MAX crisis.
Boeing is scheduled to announce second-quarter earnings on July
24, including the cash outflow impact from the MAX grounding.
Analysts also expect a potential second charge from the cut in 737
production following the $1 billion announced in April.
Boeing this week also lost a potential order for up to 50 MAX
planes from a Saudi Arabian budget carrier. Flyadeal said it would
instead buy up to 50 Airbus A320neo planes, the European rival to
Boeing ended the first six months with 119 more cancellations
than new orders, after large cancellations booked earlier in the
year, particularly from India's Jet Airways. That compared with 453
net orders at this point last year.
Bookings this year don't, yet, reflect a blockbuster deal for
200 MAX planes from British Airways-parent International
Consolidated Airlines Group SA announced at the Paris Air Show last
month. Last month was Boeing's third in a row without an order for
the MAX, once the company's best-selling plane.
Boeing faces other challenges. Airlines generally have slowed
their plane buying spree as global trade tensions rise,
particularly those involving the U.S. and China, the world's two
largest airplane markets. Rising costs also have weighed on
profits. The International Air Transport Association last month
trimmed the outlook for collective airline profits this year by 21%
to $28 billion.
Airbus took in 88 net orders in the first half, compared with
261 at this same point last year. The plane maker also announced
several new deals at the Paris aerospace fete last month, although
several of those agreements haven't yet become formal orders.
Airbus's June order haul included deals for its new A321XLR
long-range single-aisle plane, formally launched at Paris. Among
the buyers are American Airlines Group Inc. and JetBlue Airways
Write to Doug Cameron at firstname.lastname@example.org and Robert Wall at
(END) Dow Jones Newswires
July 09, 2019 12:42 ET (16:42 GMT)
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