Within 30-60 days, Boeing must reach the point where they start production of aircraft for which they only hold conditional orders (either as standalone or follow on tranches), because no customer will go unconditional with the present uncertainty, and even if they want to, no financier will fund the milestone payment associated with going unconditional. This is perhaps where the IAG LOI comes into to play, acting as a breakeven safety net in the event some currently conditional orders, for which aircraft are built, do not subsequently go unconditional.
Not sure what you mean by "conditional". As far as I understand, MAX backlog is 4000+ frames, which is more than 6 years worth of production. Not sure how many of those are firm - seems like a lot; but if it is 1/4, then 1000 is more than 1.5 year of production.
With the lead times for major assemblies, order has to be committed for at least a few months out, so again 6 month
Of you are saying something else legally happens within half a year before delivery?
Three financial stages to acquiring a commercial aircraft. LoI/MoU. Small deposit, fully refundable. This step often incorporated in the next step. Conditional contract. Larger deposit. Not refundable in cash, but often 100% transferable. Unconditional contract, larger milestone payment, financier on board, OEM's start production (air frame and engines).
Very unusual for an OEM to build without the contract going unconditional, unless prepared to have white tails in storage.
If the MAX backlog is 4,000+, all those being built at the time of the grounding, plus some of those soon to be started, will be (or should have been) unconditional orders.
Even those aircraft whose build started prior to the grounding, and for which Boeing hold unconditional contracts, may/will not have had all milestone payments made since the grounding.
For aircraft whose build was due to start after the grounding, many customers and their financiers, would have been persuaded by Boeing's optimism for return to service by June / July, to go unconditional and make initial milestone payments.
But now, the sentiment has changed, and even if customers remain optimistic, financiers are less so. Can my customer finance an aircraft they cannot use, AND retain an aircraft that was to be used to partially finance the new acquisition?
When an order becomes unconditional, it infers none of the parties (OEM, purchaser and financier) can cancel or back out of the transaction.
In contrast, a conditional order provides exits, the most common of which are finance (by far the most frequently used), delivery and performance.
Taking a hypothetical 100 unit aircraft acquisition, consisting of 10 tranches of 100 aircraft (though sometimes the first tranche will be 11 or 12 units, and the last 8 or 9).
As at today, Tranche One may be unconditional, with the OEM already part way through delivery. Tranche Two may have just become unconditional. Tranches 3-7 may be conditional, and Tranches 8-10 still LoI/MoU/options.
For Tranche One, milestone payments will be different for every aircraft, reflecting the different stages of production and delivery.
Boeing must be in a whole world of financial discomfort. MAX production continues, with an increasingly larger proportion being started with conditional, not unconditional orders.
Milestone payments are not not being made, but Boeing will still be paying Spirit and CFM.
No deliveries or withholding payments (the latter is the final payment held to cover warranty issues, so affects already delivered aircraft now grounded).
Meanwhile, customers with retrospective credits (most of them), will demand the credits accrue as if MAX aircraft were delivered on time.
Air frame and engine OEM's purchase / supply contracts contain water tight arbitration and confidentiality clauses, so just minimum market disclosures (another good reason retrospective credits are used in lieu of discounts).