Boeing 737 Max Loses First Customer as Flyadeal Picks Airbus

(Bloomberg) -- Saudi Arabian budget carrier Flyadeal reversed a commitment to buy as many as 50 Boeing Co. 737 Max jets, becoming the first airline to officially drop the plane since its grounding following two deadly crashes.

Flyadeal will operate an entirely Airbus SE fleet, the company said Sunday in a statement, buying as many as 50 A320neo-family planes from Boeing’s European rival.

The Airbus order was booked last month at the Paris Air Show by the discounter’s parent, Saudi Arabian Airlines. That announcement had sparked speculation about whether the planes would be allocated to Flyadeal, which had said in December it would spend up to $5.9 billion on Boeing Max jets.

“We understand that Flyadeal will not finalize its commitment to the 737 Max at this time given the airline’s schedule requirements,” Boeing said Sunday in an email. “We wish the Flyadeal team well and hope we can support their fleet and operational needs in the future.”

Boeing’s Grounded 737 Max -- The Story So Far: QuickTake

Boeing fell as much as 1.6% Monday in New York. The shares were down 0.9% to $352.70 at 9:37 a.m. local time.

Flyadeal will take delivery starting in 2021 of 30 Airbus A320neo aircraft, with an option for a further 20 planes from the same family of single-aisle jets.

The decision marks a commercial setback for Boeing, which is under pressure to prove the Max is safe and get it flying again after two disasters five months apart killed a combined 346 people. The narrow-body workhorse has been grounded globally since March.

Amending Orders

The uncertainty surrounding the return of the Max to the skies has prompted carriers to amend aircraft orders. Virgin Australia has pushed back delivery of its first 737 Max jets by almost two years. PT Garuda Indonesia and VietJet Aviation JSC are among the carriers that have also weighed changes in the aftermath of the fatal crashes.

Carriers around the globe are having to redeploy or lease planes, while delaying the retirement of older ones, as Boeing works on a fix for the jet. Emirates, the world’s largest long-haul carrier, has started using Airbus SE A380 superjumbos onto its shortest routes to replace lost capacity after sister carrier FlyDubai reduced services following the idling of its 14-strong Max fleet.

Five Requirements

Europe’s aviation regulator has outlined five major requirements it wants Boeing to address before it will allow the 737 Max to return to service, a person familiar with the matter told Bloomberg last week. One of them related to a previously unknown concern about the jet’s autopilot function.

Boeing won Flyadeal as a customer in December when the airline committed to buying 30 737 Max aircraft with an option for another 20. The deal, while subject to final terms and conditions, was considered a major victory for Boeing at the time, given Flyadeal has operated an Airbus fleet.

But the airline began to waver following a second fatal crash involving the plane. If the process of finding a fix for the safety problems took too long, the airline was open to other options, Chief Executive Officer Con Korfiatis told Bloomberg in April.

--With assistance from Benjamin Katz.

To contact the reporters on this story: Layan Odeh in Dubai at lodeh3@bloomberg.net;Matthew Martin in Dubai at mmartin128@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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