LONDON – As the Boeing 737 MAX crisis aims to come to some sort of an end, the company announced it still has up to US$6bn in customer liabilities due to the ongoing events.
The US$5.981bn figure comes from customer concessions and other considerations over the course of this year, consisting mainly of compensation deals with customers.
Out of this figure, around US$1.6bn represented a liquidation of customer delivery payments, meaning that airlines will pay less upon delivery for each MAX aircraft.
This will ultimately result in lower cash intakes from the manufacturer because of the crisis.
A US$3.4bn Gap?
Boeing expects US$800m to be paid in cash and another US$200m in other payments this year. Boeing expects US$200m in payments to customers in 2020 and it then doubles for next year.
There is somewhat of a US$3.4bn gap that the manufacturer has to fill as negotiations are still ongoing with airlines for discounted rates on delivered aircraft.
With the aircraft looking to be recertified, such negotiations may come to an end, meaning that the end is in sight for the manufacturer. However, the cost of getting the aircraft back in the air will continue to skyrocket.
The End is in Sight?
With the likes of the European Aviation Safety Agency (EASA) deeming the aircraft safe to fly in the middle of last month, as well as American Airlines (AA) aiming to get the aircraft back in the skies by December, it does seem that the end is in sight for Boeing.
However, there is still a lot to do. Pilots, maintenance personnel and others will require more extensive training to ensure that a repeat of this crisis does not happen again.
And with Boeing not recording any orders in September either, this will be a good move for the manufacturer to get the aircraft flying so then it can resume its sales campaign, especially going into air show season next year.
Turbulent Times Ahead
With Boeing anticipating a workforce reduction down to 130,000 by 2021, it is also a key signifier of the turbulent times ahead for the manufacturer.
It will be interesting to see how Boeing will take hold of this going into the new year, and whether the MAX will produce the success it should have done right before the crisis.
If Boeing can get this right, then it can most definitely restore a lot of its back-log and finally begin to compete with Airbus and the A320 family.
Featured Image: Boeing 737 MAX. Photo Credit: Simon Gloyn-Cox