Boeing loses 23 Max orders as Virgin Australia remakes fleet

BOEING Co lost almost half of a 737 Max aircraft order from Bain Capital's Virgin Australia under a new agreement that also postpones the initial jet delivery by two years to mid-2023.

Virgin Australia will take 25 of Boeing's Max 10 jets to serve as the "backbone" of future domestic and short-haul international flights, Jayne Hrdlicka, the budget carrier's chief executive officer, said in a statement on Tuesday.

The airline will scrap a deal for 23 of the smaller Max 8 models as it shrinks its fleet after plunging into bankruptcy earlier this year.

The newly disclosed terms, which were finalised last month, underscore the challenge for Boeing as it reintroduces the Max after a 20-month grounding prompted by two deadly crashes.

With the novel coronavirus pandemic flattening demand for travel and new aircraft, cancellations continue to damp the sales momentum that the Max has gained in recent deals with Alaska Air Group Inc and Ryanair Holdings Plc.

Boeing landed 27 gross orders last month, selling two KC-46 tankers in addition to its pact with Virgin Australia, according to data posted on the planemaker's website. Cancellations totalled 88.

By comparison, rival Airbus SE didn't land any new sales for the month while recording 11 cancellations.

This year through November, Boeing has landed 94 gross orders against 548 cancellations or conversions. After including an accounting provision for orders in jeopardy of being ditched, the US manufacturer has seen 1,048 net cancellations.

Most of the lost orders have been for Max jets, as Covid-19-stricken airlines and lessors take advantage of a contractual provision that allows them to walk away from deliveries delayed for more than 12 months.

Boeing has recorded 536 cancellations for the upgraded 737 family and removed another 562 deals from its backlog due to the accounting provision. With the changes, the order backlog for Boeing's best-selling jet has fallen to 3,290 aircraft.

The Chicago-based company delivered just seven airplanes in November, against 64 handovers for Airbus. Boeing didn't ship any 787 Dreamliners, as chief financial officer Greg Smith warned on Dec 4.

Inspection and repairs for previously disclosed structural flaws in the frames of the carbon-composite Dreamliners, Boeing's marquee twin-aisle plane, continue to take longer than anticipated, Mr Smith said. BLOOMBERG