Boeing Books No New Jetliner Orders in January
February 11 2020 - 11:29AM
Dow Jones News
By Doug Cameron
Boeing Co. said it booked no new jetliner orders in January,
increasing the financial strain that has been building during the
737 MAX crisis as airlines added no new deposits to secure a place
in the plane maker's order backlog.
The aerospace giant delivered 13 planes last month, including
six 787 Dreamliners, two 777s and military versions of its
commercial jets. Boeing said no customers canceled orders, leaving
its backlog for future production at 5,393 jets.
Deliveries, defense contracts and jetliner-service deals have
become key items for investors because they provide much-needed
cash to fill part of the gap from the prolonged grounding of the
MAX and subsequent halt in production following two fatal crashes.
Boeing has lined up a $13 billion bank loan to help fund
compensation to MAX customers, as well as the cost of halting
production.
A month without MAX order cancellations -- airlines dropped
deals for around 200 of the jets last year, including five in
December -- is a welcome turn against a backdrop of weakening
demand due to slowing airline traffic growth. The coronavirus
outbreak in China could also weigh on demand from Asian carriers,
people in the industry have said.
Airbus booked a record 274 net new orders in January and
delivered 31 jets. The European plane maker on Tuesday said it has
secured permission from Chinese authorities to restart assembly of
A320 jets at a plant in Tianjin.
Production had been halted there as part of broader travel
restrictions imposed to limit the spread of the virus, which also
dented attendance and dealmaking at the biennial Singapore Airshow
that started this week. Dozens of aerospace and defense companies
canceled their attendance at the show, likely curtailing the order
announcements often made there.
Boeing's January performance compared with 46 deliveries and 45
jet orders a year earlier. Deliveries last month included two
KC-46A military refueling tankers to the U.S. Air Force, as well as
P-8 Poseidons, a version of the 737NG converted for military
surveillance.
The two planes received mixed backing in the fiscal 2021 budget
request the Pentagon released on Monday. It is requesting $3
billion to buy 15 tankers, three more than approved by Congress
last year.
The plane has been plagued by design problems that have delayed
deliveries and left the Air Force unable to use some of its
capabilities, prompting the government to withhold some payments to
Boeing.
The Pentagon said it believes the plane will be fixed and wants
to accelerate the retirement of older tankers to save on
maintenance costs and pay for new Boeing planes.
Boeing is the world's second-largest defense contractor by sales
after Lockheed Martin Corp. After winning a string of new Pentagon
contracts in 2018, the company pulled out of a contest to replace
the U.S. arsenal of Minutemen ballistic nuclear missiles. That
leaves Northrop Grumman Corp. as the sole bidder, and the Pentagon
requested a tripling of funding for the program to $1.5 billion in
fiscal 2021.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
February 11, 2020 11:14 ET (16:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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