Boeing announces new MAX orders, grounding crisis drags

Boeing announces new MAX orders, grounding crisis drags

he Boeing logo at the New York Stock Exchange (NYSE) (Photo by Reuters)

Boeing's 737 MAX got a boost Tuesday with confirmation of new orders for the still-grounded plane, but a fresh lawsuit connected to the development of the troubled aircraft poses another challenge for the company.

The aviation giant, which has been in crisis mode since March after the MAX was grounded following a second fatal crash, said it obtained a "firm" order with an unnamed airline for 20 of the 737 MAX planes for $2.3 billion.

The announcement follows an order for 10 MAX planes by Turkey's SunExpress announced Monday at the Dubai Airshow, and a letter of intent Tuesday from Kazakhstan's Air Astana for 30 aircraft.

Analysts said the new contracts are a vote of confidence in Boeing, but uncertainty over when the MAX will return to service continues to hang over the company, after the crashes of the Lion Air and Ethiopian Airlines flights that killed 346 people.

The latest sales announcements are "welcome news for Boeing and an endorsement of the MAX," said Scott Hamilton of Leeham News, a publication specializing in aviation.

But he added, "The worst won't be behind Boeing until the FAA recertifies the airplane."

Richard Aboulafia, a vice president at the Teal Group, a market analysis firm, agreed recertification remains critical.

"There are so many potential show-stoppers and hurdles that it's impossible to say anything for certain," he said. "But yes, right now things do indeed seem to have stabilized."

But the schedule for returning the aircraft to the skies has slipped several times, as regulators have raised fresh questions about upgrades, and as the company and the Federal Aviation Administration have come in for scrutiny on the MAX.

Boeing last week pushed back the expected date for resuming flights by one month to January 2020.

Last month, Boeing Chief Executive Dennis Muilenburg endured two days of bruising congressional hearings last month at which lawmakers accused the company of cutting corners on safety to rush out the MAX to compete with an Airbus model.

The probes have centered on a Boeing flight handling system, the MCAS, that has been implicated in both crashes.

Adding to the list of worries was a shareholder lawsuit filed in Delaware Chancery Court by the Kirby Family Partnerships that names Muilenburg.

The suit alleges Boeing directors missed numerous red flags during the development of the 737 MAX, according to a Bloomberg report.

A Boeing spokesman declined to comment on the suit.

The company also faces numerous lawsuits from victims' families in US federal court.

Aviation industry sources said Boeing offered favorable terms to the carriers to secure the agreements to purchase the new aircraft.

"We are honored that our valued customers continue to place their trust and confidence in Boeing, our people and our supplier partners," said Ihssane Mounir, senior vice president at Boeing.

The airline behind the order announced Tuesday will be disclosed at a later time by the customer at a formal announcement in the carrier's home market, a Boeing spokesman said

The SunExpress order, which amounts to 10 MAX planes for $1.2 billion, marked the first firm orders for the plane in eight months.

Before this week's agreements, the last sale was in June, when Boeing secured a letter of intent from British Airways parent IAG to buy 200 of the planes.

The Kazakh carrier Air Astana offered encouraging words in announcing plans to buy more aircraft for its low cost carrier.

"We believe that the MAX will provide a solid platform for the growth of FlyArystan throughout our region, once the aircraft has successfully returned to service," said Air Astana President Peter Foster.

Boeing is scheduled on Wednesday to meet with Southwest Airlines to update the carrier on the situation, a Southwest spokesman said. The US airline has the most planes of any carrier with 34.

While the latest orders from airlines are a vote of confidence in the MAX, they are also a recognition that picking Airbus instead for a similar plane could add three or four years to delivery times because of capacity constraints at the European company, Aboulafia said.

Michel Merluzeau at AirInsight Research said the orders show Boeing is "on a better path," but that "recertification remains a big question mark."

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