ARC NEWS
July cancellations push Max backlog cut to 860 for the year
August 13, 2020
Boeing’s 737 Max backlog declined nearly 20% in the first seven months of 2020, with the company stripping more than 850 jets from its books due to order cancellations and accounting adjustments. The tally includes recently released data from July and comes as Boeing tackles the dual challenges of the 737 Max grounding and the airline industry downturn. Despite those pressures, however, Boeing says its backlog remains strong.And aerospace analyst Michel Merluzeau suspects the Max will have a strong future, assuming the aircraft safety returns to service. Boeing has predicted that the US Federal Aviation Administration will certificate the aircraft in time to allow Boeing to resume deliveries in the fourth quarter. Chicago-based Boeing says that in July customers cancelled another 43 737 Max orders. Those bring to 416 the number of Max orders cancelled since the start of the year, according to data from Boeing. Lessors have accounted for the majority of the 416 Max cancellations so far in 2020. They nixed at least 289 Max orders, or about 70% of the total, figures show. Those lessors include companies like AerCap, Air Lease, Avolon and GECAS. Airlines have cancelled at least 71 of the jets – or 17% – while the remaining 56 cancellations come from unnamed customers and include Boeing Business Jet variants of Max. Additionally, Boeing says that in July it stripped nine 737 Max from its backlog to comply with its ASC606 accounting guidelines. In the period from January through July, Boeing has removed 448 Max orders from its backlog to comply with those guidelines. The airframer still holds contracts to sell those jets but has less certainty about the likelihood that the sales will close. The combined changes, plus nine 737NG deliveries this year, left Boeing’s Max backlog at 3,543 jets at the end of July, down 19% from 4,398 jets at the end of 2019, data shows. But analyst Merluzeau, who works at consultancy AIR, can envision airlines placing additional Max orders once the industry recovers, and he suspects Boeing may have success selling cargo or military variants of the jet.Merluzeau estimates that the Max grounding and the industry downturn each account for about half the Max’s backlog tumble. He also views the pandemic as impacting Boeing and Airbus about equally. In the first six months of 2020, customers cancelled 66 Airbus jets, according to Cirium fleets data.

Source: Cirium


French pilots strongly back Transavia’s domestic evolution
August 13, 2020
Air France-KLM Group has secured a vital agreement with pilots which will enable the budget operation Transavia to conduct domestic services in France. French pilot union SNPL has strongly backed the agreement, with members voting over 90% in favour after a turnout of nearly 83%. Air France-KLM says the vote illustrates the “responsibility” that cockpit crews are taking in the “crucial juncture” as the company plots a recovery from the air transport downturn by overhauling its notoriously loss-making French domestic network. French domestic flights have faced strong competition from budget rivals as well as the high-speed rail network, and Air France wants to capitalise on a deal, signed last year, permitting the expansion of Transavia’s French fleet beyond 40 aircraft. Transavia already operates from bases at Paris Orly, Lyon, Nantes and Montpellier on over 100 routes within Europe and the Mediterranean region. Air France will reinforce the Orly base with Transavia domestic services, while holding on to specific routes – including Toulouse, Nice, Marseille and Corsica – with its ‘La Navette’ shuttle operation. But its plan also involves surrendering routes from Paris Orly where a competing rail link of up to 2h 30min exists. Transavia will be used to expand from a mini-hub in Lyon, as well as its other two bases at Nantes and Montpellier. The budget airline’s route network is yet to be detailed. “Development of Transavia on the French domestic market is a key step in the [Air France] strategic plan to improve its financial performance,” says Air France-KLM Group, adding that Transavia will enable Air France to be competitive in “each sector in which it operates”. Air France’s regional carrier Hop will complement both the Transavia operations from Lyon and the Air France network at the flag carrier’s Paris Charles de Gaulle hub. All the changes will take effect by 2023. “Air France’s domestic market is one of our group’s strategic assets,” says Air France chief Anne Rigail. “Connecting the French regions and linking them to the rest of the world is integral to our business. To ensure this activity continues, it is now essential to restore its balance.” SNPL states that the vote, which concluded on 12 August, “clearly illustrates the pilots’ desire to get involved” in both the future direction of Air France and the development of Transavia’s French operation.

Source: Cirium


Boeing delivered four jets in July, with no new orders
August 12, 2020
Boeing’s commercial activity slowed to a trickle in July, when the company handed over just four jets and took in no new aircraft orders. Detailing its July activity on 11 August, the airframer also revealed eight new cancellations for the 737 Max, bringing the total for the month to 43. Those previously unannounced Max cancellations include two more jets axed by Avolon, five cancelled by prospective Canadian start-up Jetlines and one Boeing Business Jet removed by an unnamed customer. Avolon has already disclosed cancellations of about 100 Max jets. A total of 35 cancellations had already been announced in July: 20 from lessor Alafco and 15 from AerCap. The July performance reflects the troubled, pandemic-hammered state of the airline industry and ongoing travel restrictions, Boeing says. Those factors have spurred order cancellations and delivery deferrals and hindered the ability of customers to travel to the USA to receive new jets, it adds. “Although we are starting to see some air traffic recovery in some places, the industry as a whole continues to grapple with the impact of the virus,” Boeing says. “We continue to work with customers as they… evaluate their fleet requirements.” The four aircraft deliveries in July included one 767 Freighter, one 777F and two 787s. Boeing adds that the low level of July deliveries also reflects tweaks in “production timing”, meaning some have shifted from July into early August. In addition to cancellations, Boeing reduced its backlog by another nine 737 Max to align with “ASC 606” accounting adjustments. Though Boeing still holds contracts to sell those jets, the company does not expect the deals will close due to factors that can include the financial condition of the customers. With the four deliveries, 43 cancellations and nine downward accounting adjustments, Boeing’s backlog in July declined by 56, from 4,552 to 4,496 jets. To date, Boeing has delivered 74 aircraft: nine 737s (including NG and military variants), one 747, 15 767s, 11 777s and 38 777s. Boeing this year has booked 59 orders. But its net figure for 2020 is negative to the tune of 836 aircraft, owing to cancellations, accounting adjustments and order conversions.

Source: Cirium


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