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United Kingdom Boeing Loses Another Big 737 MAX Order
Commercial aerospace and defense giant Boeing lost another customer for its troubled 737 MAX jet as Norwegian Air Shuttle canceled an order for 92 planes.
Boeing (ticker: BA) stock was down 2.7% in premarket trading on Tuesday. Dow Jones Industrial Average and S&P 500 futures were down 0.4% and 0.3% respectively.
It isn’t the first cancellation Boeing has dealt with since the MAX was grounded in March 2019. Orders for more than 100 planes were canceled in April and more than 300 have come off the books in 2020, a result of “contractual changes.”
The MAX backlog sits at about 4,200 jets. Boeing had delivered almost 400 of its newest single-aisle aircraft before it was grounded world-wide after two crashes that killed more than 300 people. The length of the grounding is unprecedented.
Because of the coronavirus pandemic, Norwegian Air’s (NAS.Norway) passenger traffic fell about 60% year over year in March, forcing the airline to restructure its debt and take state aid—a process that diluted existing shareholders. Norwegian Air stock is down about 93% year to date.
The airline has 18 MAX jets in its fleet. It also operates about 100 other Boeing jets, including older 737 models. Norwegian wasn’t immediately available to comment on the future of the jets in its fleet.
“We are not going to comment on commercial discussions with our customers,” a Boeing spokesperson said in an emailed statement. “Norwegian Air Shuttle is a longstanding Boeing customer. As with many operators dealing with a very challenging time, we are working on a path forward.”
On Monday, Boeing investors got some good MAX news, sending the stock up more than 14%. The FAA began a series of test flights that should culminate in recertifying the MAX to fly.
“While the certification flights are an important milestone, a number of key tasks remain,” an FAA statement reads. “The FAA is following a deliberate process and will take the time it needs to thoroughly review Boeing’s work. We will lift the grounding order only after we are satisfied that the aircraft meets certification standards.”
Monday’s gain amounted to 25% to 35% of the total 2019 losses related to the MAX grounding.
Boeing stock remains down about 40% year to date. The entire commercial aerospace value chain has been hammered by the Covid-19 pandemic. Aerospace supplier stocks Barron’s tracks are down about 40% as well. Airline shares have fallen more.
Write to Al Root at allen.root@dowjones.com
