Image: Reuters
Boeing released sales data for the 737 MAX line that reveal there were no new orders for the troubled jet in March, and simultaneously said that deliveries and orders for all 737 models fell in the first quarter. Overall orders were down by nearly half, to 95 from 180 in the first quarter of 2018.
After delivering 184 aircraft in the first quarter of 2018, Boeing released just 149 this year; of those 89 were for all variants of the 737. Boeing has halted deliveries of all MAX variants until software updates can be completed and approved and announced earlier that it would cut production of the MAX from 52 to 42 units a month.
Boeing has orders for more than 5000 of the single-aisle airliner on the books, though several airlines have indicated their intention to cancel or slow the delivery of the MAX. Indonesian airline Garuda has officially canceled its order of 50 MAX aircraft.
On Monday, Wall Street downgraded both Boeing’s and Southwest Airlines’ stock based on the continuing 737 MAX saga and the continuing capacity disruptions to carriers using the troubled jet. Boeing’s stock is currently trading at around $370 a share from a high of $440 in late February. Market analysts say the company’s slide has obliterated more than $20 billion in market capitalization. Bank of American Merrill Lynch on Monday changed its recommendation on Boeing from buy to neutral, resulting in a 4% drop in stock value that day. Analysts are now predicting a much longer recovery period for Boeing, believing that the MAX will remain grounded for another six to nine months. And that’s likely to be in the U.S. alone. Currently, Canada, China and the European Union are signaling that they want to independently verify the aircraft before permitting it to fly in their countries again.
Spirit AeroSystems, which builds components for the 737 MAX, saw its stock prices fall from a recent high of $99 a share on March 1 to $84 a share today, is among several contractors likely to feel the pinch of the 737 MAX slowdown.
The same can be said for domestic airlines having the 737 MAX in their fleets. Although the MAX makes up only 4% of Southwest’s fleet, market analysts believe the extended grounding of the aircraft will negatively impact the airline’s schedule and revenue. Southwest itself said that it expects to lose $150 million in the first quarter due to a variety of factors including the MAX grounding.
American Airlines has announced that it will cancel all of its MAX-based flights through June 5. The airline has 24 of the aircraft expected to fly roughly 90 flights a day.
