MIAMI – China Development Bank Financial Leasing (CDB) announced today several cuts, delaying its Boeing 737 MAX orders according to current aviation market dynamics.
Adding up another week of halted operations for Boeing, CDB said in the statement that it reduced the remaining 737 MAX 10 order to the smaller MAX 8 aircraft, deferred the delivery of 20 jets to 2024, 2025 and 2026, and canceled 29 planes worth at US$2.9bn, according to Bloomberg.
Further aircraft implications for Boeing
Even though the decision will leave standing some 70 orders between CDB and Boeing, it still means a further 737 MAX market reductions. So far in April, Avolon suspended 75 aircraft orders from a 2017 purchase agreement valued at US$8bn, and GECAS followed suit with 69 requests canceled, worth at US$6.9bn.
While the Chinese bank states that it had been working with the Atlanta-based company over months to recalibrate its MAX order book to be aligned with the market in the long-term, Boeing anticipates that the lessors will again place aircraft orders as market conditions normalize.
Regarding the COVID-19 crisis, Boeing’s CEO Dave Calhoun states that the company is set to face a new market reality that can take years to recover from, which will add another challenge to the 737 MAX program.
The type has a flying ban after 346 people died in two plane crashes, Lion Air Flight 610 on October 29, 2018 and Ethiopian Airlines Flight 302 on March 10, 2019.
For now, Boeing will offer certain economic concessions to reduce the effect of the amendments to the purchase agreements, according to CDB. One of these plans is the deferral of delivery dates, a strategy similarly implemented with other Boeing customers.