Recently, we had reported about how big the stakes are for the aircraft manufacturers and their supply chain, given the fact that many airlines are shrinking their fleet, cancelling new orders and moving to a lean business model. The devastating airline downturn, thanks to the pandemic and the travel restrictions brought by it, have effectively paralysed the passenger jet business for American aircraft manufacturer – Boeing. In May 2020, Boeing delivered mere four aircraft, all freighters, and took in new orders for only five more aircraft, again, freighters. No new order for passenger jets was recorded.
The long term customer of Boeing, United Airlines, had previously cancelled a multitude of the 737 MAX orders, with many other airlines following the trend (United reduced the order of the 737 MAX to a mere 40 new aircraft by the end of 2021). Some of the other 737 MAX deferrals have been reported from major aircraft lessors:
- GECAS, the jet leasing unit of General Electric, cancelled four aircraft,
- Aviation Capital Group cancelled three,
- Avolon cancelled one.
Boeing has not released details of other clients and customers who have cancelled their 737 MAX orders.
In May, 2020, Boeing’s management announced their revised plans to start production of aircraft, but in a limited force, so as to keep up with current market demand. However, as low as Boeing’s current output is, in a market as severely damaged as the the present one, it is still more than what global airlines are ready to take in.
At the Boeing Renton plant, in May, the manufacturer only managed to delivered one 737-based P-8 anti-submarine military aircraft. From the Boeing Everett facility, it delivered one 767 freighter to UPS, and two more 777 freighters to China Southern. What is worth noting here is that not a single Boeing 787 aircraft was delivered by the manufacturer, even though the lessened production rate of ten aircraft per month was supposed to match the market demand. As it turns out, Boeing might have to reduce this rate even further.
However, on a slightly positive note, Boeing registered orders for six 767 freighter aircraft in the month of May, 2020. Five orders are from an unidentified customer (likely to be UPS, but still not confirmed) and one order from FedEx.
Bottom line, after all the cancellations and deferrals in May, 2020, Boeing’s net order tally for 2020 stands at negative 602, consisting 322 formally cancelled aircraft, 58 new orders, and orders for 338 aircraft which are now ‘no longer firm’.
It would be interesting to see how Boeing emerges from this debacle. What are your thoughts on Boeing’s current situation? Do you think Boeing can sustain with little to no business for a couple more months, or even years to come, given that air travel is expected to stay low? Let us know in the comments!