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Ishrion
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GECAS Cancels 69 737 MAX Orders

Fri Apr 17, 2020 1:44 pm

Here we go.

GECAS cancels 69 orders, leaving it with 82 left on order. The leasing company already has 29 MAXs in its fleet.

https://mobile.reuters.com/article/amp/idUSKBN21Z1YK
 
A380MSN004
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Re: GECAS Cancels 69 737 MAX Orders

Fri Apr 17, 2020 2:05 pm

those frames was supposed to go to which airline(s)?
 
T4thH
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Re: GECAS Cancels 69 737 MAX Orders

Fri Apr 17, 2020 2:19 pm

...the leasing companies and airlines are now taking the opportunity to get rid off the orders for MAX, they do not need any more and in next time and to free the already paid debits. And with the one year grounding and 1 year delay of delivery (minimum two years delay expected in total), the expected possibility, to cancel orders, when there is a one year delay, the MAX is an easy and expected victim. As CEO of an airline/lessor I would do the same of course. Many, if not most airlines, will defer or if possible, cancel orders. So if, by luck, for an airline/lessor, there is an opportunity and something changes for them, they will be always able to go to Boeing or Airbus and to ask for early slots, these will be available.

With the delay for the B77X, the exaggerated grounding of the MAX...Boeing will be an easy victim, I fear, Boeing will see more than 1000, perhaps even up to 2000 cancellations this year (+ deferrals). Airbus will be more safe, they will have less cancellations, but many deferrals to later time. And some, like the A220 or the A321 LR and XLR I even expect, that they will taken as scheduled (or with only a light delay, when the lockdowns will end), as these will be just the right planes in the next 3 to 4 years. Boeing has only one of them, the B787 (and the B77W freighters).
For Boeing, even more worse, I fear, lessors and airlines will not even take up (and per contract forced to take up) these MAX jets, Boeing has already produced and are now parked. I fear to see soon many freshly painted white tails....

I fear, Airbus will have a real bad year 2020, followed by several bad years.
I fear, Boeing will have a pure horror year 2020, followed by several real bad years for their civil market part, with orders only for the military jets and in best case swaps to B787 and freighter jets.
 
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zkojq
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Re: GECAS Cancels 69 737 MAX Orders

Fri Apr 17, 2020 2:22 pm

Here comes the tsunami.

Presumably all of the cancelled aircraft are ones yet to be built? Considering 82 MAXs remain in GECAS' order book I think this could have been much worse for Boeing.
First to fly the 787-9
 
sxf24
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Re: GECAS Cancels 69 737 MAX Orders

Fri Apr 17, 2020 2:39 pm

A380MSN004 wrote:
those frames was supposed to go to which airline(s)?


They weren’t placed, at least implied by GE’s statement. Per Boeing’s statement, this was necessary due to lower production rates. Reading between the lines, there were too many airplanes contracted versus the current production plan. While airlines can slide out airplanes, this doesn’t really work as well for lessors. The best way to fix the schedule and help aircraft values is to cancel some unplaced lessor orders.
 
CHOWahoo
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Re: GECAS Cancels 69 737 MAX Orders

Fri May 08, 2020 9:34 pm

Air Lease is getting ready to play hardball on its MAX order book:
"Air Lease does have flexibility in our agreements with Boeing and Airbus to adjust to current market conditions. For example, on the MAX 737, we are now beyond the 12-month point of delay on nine of our contractual delivery slots. And with the cessation of production to date, coupled with the lower announced production rates ahead, it is likely that a majority of our forward positions will be more than 12 months delayed on the 737 program. With both Boeing and Airbus, there's a mutual right to cancel if any delivery stretches more than 12 months beyond the original contracted delivery date. We are working closely with the Boeing company and our customers to address these delays and to look at deferral of cancellations on a case-by-case basis. I simply want to emphasize this example on the 737 MAX as one way in which we look to adapt to current demand and market environment. We do believe, however, that once the 737 MAX has reentered service, it will be one of the most highly tested aircraft flown, and we do believe in the aircraft."
Source: https://www.sec.gov/Archives/edgar/data/1487712/000155837020005998/al-20200507xex99d1.htm
 
cedarjet
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Re: GECAS Cancels 69 737 MAX Orders

Fri May 08, 2020 9:43 pm

Here’s the problem: the delay of 12 months or more means airlines can get their deposits back. A temptation, given cratering traffic, that many will not be able to resist. (The Max’s sole advantage over a refurbished 737NG, fuel economy, is also severely undermined by cratering fuel prices.)
fly Saha Air 707s daily from Tehran's downtown Mehrabad to Mashhad, Kish Island and Ahwaz
 
smartplane
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Re: GECAS Cancels 69 737 MAX Orders

Fri May 08, 2020 9:46 pm

cedarjet wrote:
Here’s the problem: the delay of 12 months or more means airlines can get their deposits back. A temptation, given cratering traffic, that many will not be able to resist. (The Max’s sole advantage over a refurbished 737NG, fuel economy, is also severely undermined by cratering fuel prices.)

The temptation is to cancel and re-order. No-one wants to be locked to pre-COVID prices.
 
berari
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Re: GECAS Cancels 69 737 MAX Orders

Fri May 08, 2020 9:55 pm

cedarjet wrote:
Here’s the problem: the delay of 12 months or more means airlines can get their deposits back. A temptation, given cratering traffic, that many will not be able to resist. (The Max’s sole advantage over a refurbished 737NG, fuel economy, is also severely undermined by cratering fuel prices.)


Is that 12 month period pretty standard? This essentially applies to all MAX at this point.
 
TaromA380
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Re: GECAS Cancels 69 737 MAX Orders

Fri May 08, 2020 10:09 pm

One of the rare public disclosure of contractual terms.
 
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lightsaber
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Re: GECAS Cancels 69 737 MAX Orders

Fri May 08, 2020 10:34 pm

smartplane wrote:
cedarjet wrote:
Here’s the problem: the delay of 12 months or more means airlines can get their deposits back. A temptation, given cratering traffic, that many will not be able to resist. (The Max’s sole advantage over a refurbished 737NG, fuel economy, is also severely undermined by cratering fuel prices.)

The temptation is to cancel and re-order. No-one wants to be locked to pre-COVID prices.

This will hit every order, not just the MAX. In particular widebody aircraft.


It hurts Boeing more due to crossing contractual thresholds.

Lightsaber
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SheikhDjibouti
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Re: GECAS Cancels 69 737 MAX Orders

Fri May 08, 2020 10:46 pm

berari wrote:
cedarjet wrote:
Here’s the problem: the delay of 12 months or more means airlines can get their deposits back. A temptation, given cratering traffic, that many will not be able to resist. (The Max’s sole advantage over a refurbished 737NG, fuel economy, is also severely undermined by cratering fuel prices.)


Is that 12 month period pretty standard? This essentially applies to all MAX at this point.
All? Not really. not yet.

It is true that the whole program is delayed by over 12 months, but as each early customer drops out, other customers with later deliveries (2022, 2023 etc) find themselves promoted such that their deliveries could be exactly as per schedule, assuming that Boeing and the MAX eventually prevail. We will only know the answer to that when 2022 & 2023 actually roll around. Nobody is going to get their money back for something that is still 2-3 years into the future.

If you are an airline CEO looking to cancel your order, you have either got to wait for your delivery time to pass, plus another 12 mths.
Or you need to get your prayer mat out and hope the MAX is terminated. Period.

Meanwhile, all you can look forward to is uncertainty.

[Perhaps I should add option #3; cut a deal with Boeing whilst you can]
Nothing to see here; move along please.
 
YYZLGA
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Re: GECAS Cancels 69 737 MAX Orders

Sat May 09, 2020 2:19 am

It's a remarkable irony that now that Boeing is suffering a severe cash crunch, it goes without saying that the government will do whatever it takes to bail them out and save them. It's a shame that that was considered a completely unacceptable option for Bombardier.
 
smartplane
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Re: GECAS Cancels 69 737 MAX Orders

Sat May 09, 2020 2:20 am

cedarjet wrote:
Here’s the problem: the delay of 12 months or more means airlines can get their deposits back. A temptation, given cratering traffic, that many will not be able to resist.

Maybe.

Boeing are on V3 for some MAX contracts, where the increased enticements incorporated may be enough to keep orders intact, especially if partly delivered.

Leasing companies are different, as part / all of the order may have been speculative, or lessees may have cancelled. Even blue chips are experiencing financier pressure to cancel orders where customers are yet to be found, or are not considered to be good credit risks, especially if possible at low / no cost.
 
ericm2031
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Re: GECAS Cancels 69 737 MAX Orders

Sat May 09, 2020 9:42 am

YYZLGA wrote:
It's a remarkable irony that now that Boeing is suffering a severe cash crunch, it goes without saying that the government will do whatever it takes to bail them out and save them. It's a shame that that was considered a completely unacceptable option for Bombardier.


They don’t need a bailout, they raised $25B on their own.

Bombardier was in a much worse situation with a product nobody was buying, so basically not worth much.
 
KlimaBXsst
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Re: GECAS Cancels 69 737 MAX Orders

Sat May 09, 2020 5:12 pm

If one thinks about it the MAX reborn, into a “Covid friendly” seating configuration could quickly become the airliner of choice as airlines dump large widebodies, and passengers become accustomed to tech stop long hauls.

One door closes another opens in trouble times.
Aesthetically the A 340 got it right!
 
astuteman
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Re: GECAS Cancels 69 737 MAX Orders

Sat May 09, 2020 8:46 pm

KlimaBXsst wrote:
If one thinks about it the MAX reborn, into a “Covid friendly” seating configuration could quickly become the airliner of choice as airlines dump large widebodies, and passengers become accustomed to tech stop long hauls.

One door closes another opens in trouble times.


At the risk of sounding partisan, I would have thought that the aircraft of choice to replace large widebodys being dumped by airlines would be the A321XLR, no?
Greater capacity? Greater range?
Rgds
 
YYZLGA
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Re: GECAS Cancels 69 737 MAX Orders

Sun May 10, 2020 6:49 pm

ericm2031 wrote:
YYZLGA wrote:
It's a remarkable irony that now that Boeing is suffering a severe cash crunch, it goes without saying that the government will do whatever it takes to bail them out and save them. It's a shame that that was considered a completely unacceptable option for Bombardier.


They don’t need a bailout, they raised $25B on their own.

Bombardier was in a much worse situation with a product nobody was buying, so basically not worth much.


The point is that people are willing to loan money to Boeing or buy planes from them (not that they have a product that many people are buying right now) because they know that Boeing will be bailed out by the U.S. federal government, whether explicitly or implicitly, though very generous and well-timed defense contracts. They also don't have a major country actively trying to drive them into bankruptcy through dubious trade policy.

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