China Development Bank Financial Leasing (CDB) is the latest in a long line of airlines and lessors to ax a substantial part of its Boeing 737 MAX orders. On Monday, CDB announced it had agreed with the plane manufacturer to cancel the delivery of 29 out of its 101 MAX backlog.
Canceling 29, deferring the rest
Boeing’s MAX program just cannot catch a break. As the grounding of the MAX has now passed the one-year mark, more airlines and lessors can retract orders without penalty due to clauses in sales contracts. These are activated if the plane manufacturer is unable to make delivery within one year of the agreed-upon date.
As the aviation industry recalibrates what was a seemingly endless expansion, expanding numbers of customers are coming forward to take advantage of this clause. The latest of Boeing’s customers to invoke a cancellation is aircraft leasing company China Development Bank. The lessor announced on Monday that it had canceled an order for 29 MAXs and deferred delivery for most of the rest in its backlog.
“In light of evolving aviation market dynamics, we’ve been working together with Boeing over many months to re-calibrate our MAX orderbook to be in line with our long-term view of the market and related opportunities,” Xuedong Wang, chairman of CDB Financial unit CDB Aviation, said in a statement shared with Reuters.
CDB Financial Leasing also said that all 737 MAX 10 jets still on order will be downsized to the smaller 737 MAX 8 model, and 20 deliveries will be deferred to dates in 2024, 2025, and 2026. No exact details for the dates were provided.
Tens of billions of dollars
According to Forbes, Boeing’s backlog has now shrunk by over 300 planes, as cancellations have rolled in through March and April. Last week, Brazilian airline GOL canceled 39 orders for the 737 MAX, leaving it with 95 yet to be delivered. Another plane leasing firm, Dublin-based Avolon, previously canceled an order for 75 MAXs, worth $8 billion at list value. In total, for the month of March, Boeing lost orders for 150 of the grounded airplane model.
The blows to Boeing just keep coming these days. Only three days before the CBD move, General Electric’s aircraft leasing division Gecas canceled orders for 69 Boeing MAXs to a value of $6.9 billion. According to Bloomberg, it is, however, maintaining orders for 82 of the model after reaching an agreement with the airplane manufacturer to “rebalance” the order book.
Production of the 737 MAX was frozen back in January, and with airlines deferring deliveries, a large number of the aircraft are currently in storage.
On a positive note
Boeing did receive 31 orders in March, among those 12 787 Dreamliners from Japanese airline All Nippon Airways (ANA) and 18 P-8 maritime control aircraft, a militarized version of the 737 NG.
Where do you think this will all end for Boeing, and specifically its MAX program? How many more orders will be canceled before we see the end of the crisis? Let us know your thoughts in the comments.