Boeing 737 MAX Grounding Hits Jetliner Deliveries -- 2nd Update

Date : 07/09/2019 @ 4:57PM
Source : Dow Jones News

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 period.

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 the MAX.

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 Corp.

Write to Doug Cameron at doug.cameron@wsj.com and Robert Wall at robert.wall@wsj.com

 

(END) Dow Jones Newswires

July 09, 2019 12:42 ET (16:42 GMT)

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