Boeing Max Buyer Air Lease Mulls Reinstating Canceled Orders
(Bloomberg) -- Air Lease Corp. is considering reinstating some previously canceled Boeing Co. 737 Max orders, though not until more regulators clear the jet’s return, Chairman Steven Udvar-Hazy said.
Los Angeles-based Air Lease, one of the world’s largest aircraft leasing firms, had committed to 195 Max purchases as of year-end 2019, including orders, options and planes already delivered.
Then came the coronavirus, which sapped demand for aircraft and led to the loss of more than 1,000 Max orders. The jet’s extended grounding after two deadly crashes gave struggling buyers leverage to cancel purchase contracts that are normally iron-clad.
Udvar-Hazy’s comments suggest at least a portion of the dropped orders could reappear in Boeing’s backlog, though restored purchases would likely have terms more advantageous to the airlines and lessors.
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Air Lease canceled 19 Max orders last year, while converting some to larger Boeing 787s. It currently has 107 unfilled orders for the single-aisle jet, according to the Chicago-based manufacturer’s website.
Udvar-Hazy said Air Lease expects to firm up its fleet plans by this summer, with a focus on the -8 and -9 versions of the Max. He said the new total won’t approach 200 jets.
Boeing is trying to place dozens of unsold 737 Maxes. Delivering more planes, and finding airlines or leasing firms to claim the orphaned ones, depends on more regulators following the U.S. Federal Aviation Administration, which lifted its 20-month ban in November, Udvar-Hazy said.
Not having approvals from the European Union, China and Russia “makes it hard for us to reactivate orders for white tails,” Udvar-Hazy said Monday, using an industry term for newly built planes that lack a buyer.
“China is a question mark,” Udvar-Hazy said on an Airline Economics Growth Frontiers webinar. It will likely become a political issue, and the new Biden administration will have to resolve it, he said.
Airlines in North America are using the Max on commercial flights, while the European Union Aviation Safety Agency could clear the plane’s return this month. Canada said Monday that it’ll lift its ban on the Max on Wednesday.
China, the fastest-growing major market for aircraft sales, was the first to idle the plane in March 2019 after the second of two Max crashes that killed a total of 346 people. It hasn’t said when it will allow the plane to fly, and the relationship with the outgoing Donald Trump admimistration is raw as President-elect Joe Biden prepares to be sworn in on Wednesday.
“The next 90 days are critical,” Udvar-Hazy said. He added that Boeing should dropped the “scarred” Max name.
Boeing didn’t respond to a request for comment on the Martin Luther King Jr. holiday on Monday.
In the longer term, Hazy expects Airbus SE to take market share from Boeing in the market for narrow-body jets, citing the superior economics of the European manufacturer’s A321neo, which can seat more passengers at lower operating costs than the competing Max-10, he said.
Udvar-Hazy said he expects Airbus to eventually capture a 65% share of the global narrow-body market.
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