MAX Grounding Puts Boeing on Track for Lowest Deliveries in Eight Years -- Update
September 10 2019 - 12:44PM
Dow Jones News
By Doug Cameron
Boeing Co. delivered 18 jetliners in August, leaving the
aerospace giant on track for its lowest annual total in eight
years.
The plane maker said Tuesday that it delivered 276 planes
through August compared with 481 at the same point in 2018,
trailing analysts' revised estimates for around 500 deliveries in
2019. It handed over 64 planes in August 2018.
Deliveries halted after two 737 MAX planes crashed within six
months through March, leading regulators to ground the aircraft
globally.
The MAX crisis interrupted a multiyear aerospace boom, prompting
the cancellation of thousands of flights, denting airline profits
and threatening jobs in Boeing's global supply chain.
Boeing has suspended financial guidance for the year and warned
in July that it might slow or halt production of its 737 MAX
jetliner if regulators don't approve its return to service by the
end of this year.
Chief Executive Dennis Muilenburg said at the time that while
Boeing plans to continue producing 42 of its 737 jets a month,
including the MAX, and to boost that rate to 57 next year, any
slippage in the timeline for the return of the MAX could force the
company to lower output.
Most MAX operators such as Southwest Airlines Co. don't expect
the plane to return to service until December or January. Some,
such as Ryanair Holdings PLC, have already cut planned flying next
summer because they don't expect to have sufficient planes.
"The only thing I can tell you this is uncharted territory,"
Steve Udvar-Hazy, executive chairman of Air Lease Corp. said at an
industry conference last week. The plane-rental giant has received
15 of the 165 MAX jets it has ordered.
Boeing stock rose 2.1% Tuesday to $366.16 while the S&P 500
fell 0.6%. The shares have traded within a narrow range in recent
weeks, in part because analysts expect a surge in deliveries next
year, while airlines continue to make progress payments to bolster
the company's closely-watched cash flow.
However, Brazil's Gol Linhas Aéreas Inteligentes SA said last
week that it had suspended deposit payments to Boeing. It has
received seven of the 129 MAX jets it ordered. Boeing declined to
comment on customer issues.
The company hasn't updated its July guidance for securing
approval for the MAX to fly again early in the fourth quarter,
allowing it to resume deliveries. But Boeing has yet to submit the
required changes to the scrutiny of global regulators.
Mr. Muilenburg is due to update investors at an industry
conference on Sept. 11.
Rival Airbus SE, which is set to overtake Boeing in terms of
deliveries this year, shipped 42 planes in August, taking its
year-to-date total to 500. Airbus has secured 95 orders so far this
year, after cancellations.
Boeing booked nine orders last month, including two 737 business
jets. It booked no MAX deals for the sixth month in succession,
though has 4,544in backlog.
The company has also suffered setbacks in other programs, with
787 output at its North Charleston, S.C., facility closed for four
days last week because of Hurricane Dorian. Testing of its delayed
777X jetliner has also been interrupted following a testing failure
last week. Boeing said Tuesday that the problem wouldn't have a
significant impact on its testing or delivery schedule.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
September 10, 2019 12:29 ET (16:29 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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