Boeing 737 MAX cancellations pile up during shutdown

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(Reuters) – Boeing Co (TO PROHIBIT) announced Tuesday another 75 cancellations of its 737 MAX airliner in March, as the coronavirus crisis worsened the disruption caused by the grounding of its best-selling plane.

FILE PHOTO: Unpainted Boeing 737 MAXs are seen parked on an aerial photo at Renton Municipal Airport near Boeing Renton facilities in Renton, Washington, United States, July 1, 2019. Photo taken July 1, 2019 REUTERS / Lindsey Wasson

The American planner released a total of 150 MAX cancellations in March, 75 of which were previously reported by Irish rental company Avolon. New cancellations have been made by buyers, including 34 of the 135 aircraft ordered by the Brazilian GOL (GOLL4.SA).

GOL confirmed the 34 canceled planes and said it had reached an agreement with Boeing on “cash compensation and changes to future orders and associated payment schedules”.

“GOL remains fully committed to the 737 MAX as the heart of its fleet and this agreement further strengthens our long-term partnership with Boeing,” said GOL chief executive Paulo Kakinoff in a statement. GOL now has 95 firm orders remaining for 737 MAX.

The cancellations come as Boeing seeks to disentangle its delivery commitments after having stopped production of the MAX in January, following delays in its return to service.

Boeing shares fell 4.3% to $ 141.00, down $ 6.33.

Boeing, facing a 13-month freeze on MAX deliveries and now halting larger aircraft deliveries due to the coronavirus outbreak, said it had delivered 50 aircraft in the first quarter, just one third of the 149 observed a year earlier.

It was the lowest since 1984 for the first quarter.

The company released in March 12,787 Dreamliners, a 767 freighter and 18 pre-MAX versions of the 737 for the P-8 maritime patrol program. For the first quarter, it recorded 49 new orders, for a negative total of 147 after cancellations.

After further accounting adjustments representing aircraft ordered in previous years but now unlikely, adjusted net orders for Boeing dropped to 307 aircraft.

The pandemic has forced Boeing and its European rival Airbus (AIR.PA) to reduce production in the face of falling demand, airline cash flow problems and logistical difficulties in aircraft delivery.

Boeing is still in talks with regulators to obtain authorization to return the aircraft to service. Boeing said last week that it was dealing with two new software issues with the MAX flight control computer.

Major US airlines, which are experiencing an unprecedented drop in demand due to the coronavirus, said on Wednesday that they agreed in principle to the terms of the US government’s $ 25 billion in salary assistance.

Reportage by Rachit Vats, David Shepardson and Tim Hepher; Editing by Maju Samuel and Sonya Hepinstall

Our standards:Principles of the Thomson Reuters Trust.

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