American Airlines is seeking Boeing’s help to arrange financing for the purchase of at least one dozen 737 Max jets scheduled to be delivered this year, with the fate of those orders hanging in the balance, according to a report.
The Wall Street Journal, citing unnamed sources, reports on 10 July that Fort Worth, Texas-based American has threatened to cancel 17 Max scheduled for delivery this year if it is unable to secure financing.
American declines to comment about the report and Boeing says it does not discuss talks with customers.
“We are not going to comment on discussion with our customers,” Chicago-based Boeing says. “It is an unprecedented time for our industry as airlines confront a steep drop in traffic. We continue to work closely with our customers to support their operations, while balancing supply and demand with the realities of the market.”
The company also notes its “focus continues to be on working with global regulators” on the process of certificating the Max, which has been grounded since March 2019.
An unnamed source familiar with American’s order downplays the threat that the carrier might cancel the Max orders. American, the source says, is seeking Boeing’s help to secure financing at favourable rates, which have become more difficult to obtain amid the coronavirus downturn.
Boeing’s in-house financial arm, Boeing Capital Corporation, helps airlines globally find financing needed to acquire new jets.
The source also says discussions focus on roughly one dozen jets, not 17.
American has already taken delivery of 24 737 Max (those jets are in storage) and has outstanding orders with Boeing for another 76 of the aircraft, according to Boeing and Cirium fleets data. Cirium estimates 17 of those will be delivered this year, though actual deliveries will depend on when the FAA certificates the Max.
Boeing has said it expects certification will occur in time for deliveries to resume in the third quarter.
Boeing has been beset by Max cancellations in recent months. So far in 2020, customers – many of them lessors – have cancelled some 450 Max orders.
Though no major US airlines have cancelled Max orders, Southwest Airlines and United Airlines recently announced new financial arrangements for Max purchases.
In April United said it and Singapore lessor BOC Aviation agreed to a sale-leaseback deal covering 16 737 Max. Under the arrangement, United will sell the jets to BOC, and lease them back.
Then in May Southwest said it too would sell and lease back 10 737 Max.