Boeing got hit with a new wave of canceled plane orders

The company reported Tuesday that 60 orders were canceled in June, mostly by aircraft leasing companies.

Boeing (BA) also dropped an additional 123 planes from its backlog of orders because it no longer can be certain those orders will be filled. Some of that uncertainty is due to the financial condition of an airline customer. But counted among those tenuous orders are 97 planes that Norwegian Air Shuttle says it has canceled, but which Boeing has yet to acknowledge in its cancellation total.

Fortunately for Boeing it still has more than 4,500 jets in its backlog, enough to keep its factories working for years to come. But the June results mean Boeing has 843 canceled or uncertain orders in 2020, compared to only 59 new orders.

On the other side of the ledger, it could count only one new order in the month — for a 767 freighter destined for FedEx (FDX).
Most of the planes canceled or dropped from the backlog were the 737 Max, the troubled jet that has been grounded since March 2019 following two fatal crashes that killed 346 people. There were also five 787 Dreamliner jets among the planes that Norwegian says it canceled.
Boeing was able to deliver 10 jets, as it ramped up production that had been shut because of health concerns related to the Covid-19 pandemic. It also restarted production of the 737 Max in late May after temporarily halting production in January, although it has yet to be able to deliver more than 400 of those jets that it has built during the grounding.

Deliveries are important because most of the money that Boeing gets for building a jet comes at the time of delivery. But its deliveries in the second quarter fell to 20, down from 50 in the first quarter and 90 in the second quarter of 2019.

The 20 jets delivered represented the lowest number of commercial airplanes delivered in a quarter by Boeing since 1977.

Don't expect to fly on a Boeing 737 Max anytime soon

“Our commercial airplane deliveries in the second quarter reflect the significant impacts of the Covid-19 pandemic on our customers and our operations that included a shutdown of our commercial airplane production for several weeks,” said Boeing CFO Greg Smith. “We have and will continue to work with our customers on specific timing and adjustment to deliveries.”

“We continue to closely monitor the commercial marketplace by staying very engaged with our customers around the globe to fully understand short term and long term requirements,” he added.

Most of the 10 jets delivered in June were either freighters or an earlier version of the 737 that is sold to military customers.

Given the low demand for air travel during the pandemic, passenger airlines have little need or desire to accept delivery of jets. Only about 60% of the roughly 20,600 jets in global fleets are now in service, according to travel and analytics expert Cirium.

Boeing is in the process of cutting staff by 10%, or 16,000 jobs, as it scaled back production plans going forward to adjust to the lower level of demand.

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