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Tarnished Max 737 Critical For Boeing’s Recovery From Pandemic


11/20/2020


Tarnished Max 737 Critical For Boeing’s Recovery From Pandemic
The most infamous aircraft of the world, the Max 737, is now the key for recovery of the manufacturing might and financial fortunes of Boeing Co.
 
Whether travellers and airlines renew interest in the best-selling plane of the company after two deadly crashes, will in a large part, decide how fast the plane maker is able to come out of the devastating blow that it was dealt with because of the grounding of the plans as well as the novel coronavirus pandemic.
 
On Wednesday safety approval to fly again was given to the Max 737 planes of Boeing by the United States regulators. The planes had been grounded for 20 months worldwide after the two deadly crashes in March last year that resulted in damaging revelations, executive-suits and a huge cash consumption.
 
Boeing’s best way to spur growth and revamp its balance sheet that has been hit hard by the grounding and the pandemic, is the latest 737 model – despite its image being tgarnished because of the crashes.
 
About 80 per cent of a backlog of 5,121 orders of Boeing is for the Max 737 jets of the company and it is the only model of the company in the critical single-aisle narrow bodied plane segment.
 
During the pandemic when borders are closed and airlines are fighting for survival, there is hardly any demand for the costlier twin-aisle aircraft such as Boeing’s 787 Dreamliner.
 
“Boeing’s success in the 2020s rests in large part on reviving the 737 Max,” Seth Seifman, an analyst with JPMorgan Chase & Co., said in a report to clients this week.
 
Ken Herbert, an analyst with Canaccord Genuity, said in a note to clients that Boeing must first “turn the tide on Max orders” in order to change the narrative on its most important product. The orders are however lagging behind because there have been almost 500 cancellations of orders for the aircraft.
 
Wide-ranging talks with Boeing’s largest 737 customer, Southwest Airlines Co, is critical to that effort. The thing that Boeing can negotiate on include a revising the delivery schedule at a time when there is no growth in the airline, providing compensation for the disruption caused by the during the longest-ever US grounding and possible also boosting the order book for the Max 7 model which has seen slow demand, prior to its commercial launch.
 
Southwest Chief Executive Officer Gary Kelly told reporters Thursday, both parties are highly motivated to get a deal done.
 
“I don’t want this to go on for another six months,” he said.
 
 “So we are not actively engaged in looking at the A220 at this point,” he said. “That’s not to say we won’t be. Right now, we’re simply focused on our discussions with Boeing and the Max 7.”
 
While allowing the Max 737 to fly again US regulators also demanded extensive revisions to the aircraft’s flight-control computers and other changes prior to the commercial usage of the Max 737.
 
“As we have throughout our history, we will keep learning and evolving, because lives depend on the work we do,” CEO Dave Calhoun told employees.
 
(Source:www.bloombergquint.com)