smartplane wrote:mjoelnir wrote:Airbus is delivering at a good rate. This year should end in about 400 A320 family frames delivered, if we do not see a year end push.
It seems that Airbus has reduced current production rates down to 40 frames a month, to match the delivery rates.
As long as Airbus keeps delivering, Airlines and leasing companies have no reason to scrap contracts. They have to renegotiate. In worst case they lose the down and progress payments.
At Boeing any airline or leasing company can start of with suing for breach of contract and Boeing will be in difficulties to keep the down and progress payments.
Lightsaber came with a list of Airbus customers that are in trouble. Here is one big Boeing customer, Lion Air. They have also A320neo family frames on order.
What should stop them from canceling the 737MAX contracts and sue Boeing if down and progress payments are not returned.
The biggest Boeing problem in regards to the melting 737MAX backlog is not loosing the contracts, but the need to return the customers money.
You underestimate Boeing.
With the extended MAX grounding, Boeing found themselves with a largely generic contract template for smaller / medium customers, and corporate one-off contracts for the big players, none of which (on either side), envisaged a protracted global model grounding.
This triggered a replacement generic Mk2 contract for smaller customers, and largely generic in respect to compensation for the larger, which in hindsight still under-estimated the grounding. Most compensation was in the form of retrospective credit top-ups. Not all customers executed this contract - probably the ones which have since announced cancellations.
Version 2.1 was in development / discussion late 2019 / early 2020, quickly replaced by Version 3 to account for the even longer grounding and largely by good fortune COVID impact.
Version 3 introduces greater flexibility, so neither party needs to keep amending contracts, with multiple tiers of retrospective credits (level 1 - original contract, level 2 - level 2 contract, level 3 - level 3 contract). Level 3 credits increase for every specified period of delay. Accrued credits decrease from the moment Boeing advise the customer their aircraft is ready for delivery (or earlier if the customer delays the delivery process). Conversion values to cash, other services, additional MAX orders, 787 and 777 orders have been adjusted.
The result, with some tweaking, is a very nimble contract, parts of which we will probably see incorporated in future contracts for all new aircraft, and not just at Boeing.
Some X customers have executed V3 style contracts, though with different accrual rates and conversion values.
In some aspects, the Max grounding has given both Boeing and their customers a much wider breathing room (at potential expense of Boeing) in negotiations than Airbus. Yes, there may be cancellations, but I would think customers will be happier with this arrangement and situation (ironically) than a hard ramming of deliveries from the other side. How this plays out with regards to airline-manufacturer relations will be seen 5 years later.