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When it comes to Boeing Co’s 737 Max, things can always get worse.
American Airlines Group Inc and Southwest Airlines Co added to a chorus of order deferrals and cutbacks for the embattled jet, which has been grounded for more than 18 months following two fatal crashes. American has deferred delivery of 18 Max jets that were meant to be delivered in 2021 and 2022 and will take them on a new timeline over 2023 and 2024. Chief Financial Officer Derek Kerr said there would have to be a “substantial improvement in the demand environment†to justify taking the jets before then.
Southwest, the largest Max customer, said it, too, may restructure its order after already agreeing
to take no more than
48 of the planes through December of next year.
Both the schedule of new deliveries and the pricing of Southwest’s order are on the table, CEO Gary Kelly said in an interview with Bloomberg Television. “In this world that we’re living in, we’re talking to them about everything. I’m not happy that the Max has been delayed for now getting close to two years and we still don’t know when we’ll have it in service,†Kelly said. “We’re looking at the pricing in a whole new environment and obviously we need certainty around the Max, period.â€
American is planning to reintroduce the Max in December on a Miami-to-New York route, pending approval from US regulators that finally appears within reach. But Southwest doesn’t see the jet flying as part of its fleet until the second quarter of next year. That’s a reflection of the logistical challenges involved with bringing mothballed jets back into service, but also a sign that Southwest already has more than enough planes as it is.
It’s not just Boeing: Rival Airbus SE is also facing order revisions in the wake of the pandemic and a slower-than-expected recovery in air travel. American said it had delayed some deliveries from the European planemaker, and Delta Air Lines Inc said that it had pushed out the handoff of $5 billion worth of Airbus jets until after 2022. But the Max’s prolonged grounding has made the plane particularly vulnerable. More than 1,000 Max jets have been removed from Boeing’s backlog this year, either because the orders were cancelled outright or because delayed deliveries and stressed finances at the buyer made it doubtful they would be filled. There are now 3,357 Max jets on order before accounting for any potential future cuts on the part of Southwest and other carriers.
—Bloomberg