Malaysia Airlines put its Boeing 737 Max order on hold as the global grounding drags on following two deadly crashes. Boeing (BA) stock dipped.
The airline was scheduled to have five Boeing 737 Max jets delivered this year starting in July.
“In view of the production stoppage and the delayed return to service of the 737-MAX, Malaysia Airlines has suspended the delivery of its orders,” Malaysia Airlines told Reuters in an email.
The airline has struggled with debt following two high profile incidents in 2014. Meanwhile, Boeing 737 Max customers in the U.S. have continued to push back their timelines for the plane’s return.
On Tuesday, American Airlines (AAL) said it is pulling the Boeing 737 Max from its schedules through June 3, after earlier cancelling those flights through April. Southwest Airlines (LUV) removed the jet from its schedule until April, while United Airlines (UAL) has removed it until June.
Boeing shares closed down 0.8% at 329.80 on the stock market today. Shares are stuck well below their 50- and 200-day moving averages, according to MarketSmith chart analysis.
Boeing 737 Orders On Hold
Malaysia Airlines’ decision follows Virgin Australia’s announcement last year that it would delay its Boeing 737 Max deliveries by two years to cut back its capital spending.
Airlines have also rushed to swap Boeing 737 Max orders for other jets. Air Lease (AL) changed 15 of its 737 Max orders for five 787 Dreamliners last year.
India’s Jet Airways went bankrupt in April, removing 125 Boeing 737 Max jets from Boeing’s order books.
Boeing had negative orders for commercial jets in 2019, losing a net 87 orders vs. a gain of 893 net orders in 2018. The lost orders included 183 for the 737.
To make up for its lagging sales, Boeing is making massive concessions to 737 Max customers to sign new orders, according to reports.
“Airline executives in South America and Southeast Asia have told me they’ve been offered deals on small sales that are normally only given on really big orders, ones in the hundreds,” aviation analyst Alex Macheras told the Telegraph.
Follow Gillian Rich on Twitter @IBD_GRich for aviation news and more.
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