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MarketScreener Homepage  >  Equities  >  Nasdaq  >  American Airlines Group Inc.    AAL

AMERICAN AIRLINES GROUP INC.

(AAL)
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Boeing in scramble to shore up 737 MAX financing -sources

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07/10/2020 | 10:17am EDT

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July 10 (Reuters) - Boeing is scrambling to shore up financing for the 737 MAX as it awaits regulatory approval for design changes after the plane was grounded following two fatal crashes, industry sources said.

Boeing is anxious to resume deliveries once regulators declare it safe and airlines agree training. But confidence in the jet has been hit by the 15-month grounding, making the financing needed to ensure smooth deliveries scarce and compounding a dearth in demand due to the coronavirus crisis.

"Nobody wants to take new aircraft and this is particularly true for the MAX right now," a senior aviation financier said.

The value of MAX jets on the aircraft market has fallen by 11% since the start of 2020 and is likely to face more pressure in coming months, depending on the timing of its return, Eddy Pieniazek of aviation advisers Ishka said.

With capital markets unavailable after the collapse in air travel during the coronavirus crisis and banks refusing most new business, only leasing companies have spare financing capacity though many are also fighting their own problems, bankers say.

Boeing's strategy, first reported by Reuters last month, has been to encourage lessors to strike deals with airlines to buy MAX jets and rent them back to airlines.

In return, Boeing is seen ready to allow the same leasing companies to cancel part of their own plans to buy MAX jets directly, easing pressure on their balance sheets.

As a last resort, Boeing stands ready to buy back jets and lease them to airlines itself as a temporary measure through its Boeing Capital financing unit, an aviation market source said.

Singapore's BOC Aviation last month canceled 30 of the jets shortly after it had struck purchase-and-leaseback deals for MAXs with United Airlines and Southwest in what many in the industry saw as related moves.

Boeing is now trying to facilitate similar deals for leasing companies to step in and finance deliveries for launch customer American Airlines, the sources said.

Previous financing for some of the 17 MAXs that American was meant to receive this year has expired, triggering talks with Boeing, people familiar with the matter said, noting that American was seeking the same pre-pandemic terms.

The Wall Street Journal said American had threatened to cancel some orders unless Boeing helped with funding.

Boeing said it would not comment on customer talks. American, which has 76 MAXs on order, declined comment.

The loss of a high-profile order from American would deal a harsh blow to the MAX program it helped launch in 2011.

Boeing was forced to tear up plans for an all-new plane and agree a faster upgrade to its 737 after American was on the verge of handing an entire 460-plane order to Airbus. (Reporting by Tracy Rucinski, Tim Hepher; additional reporting by Ankit Ajmera in Bengaluru; Editing by Ramakrishnan M. and Alexander Smith)

Stocks mentioned in the article
ChangeLast1st jan.
AIRBUS SE -0.42% 61.71 Real-time Quote.-52.48%
AMERICAN AIRLINES GROUP INC. -0.54% 11.12 Delayed Quote.-61.23%
BOC AVIATION LIMITED -2.61% 44.8 End-of-day quote.-43.47%
BOEING COMPANY (THE) -2.44% 158 Delayed Quote.-51.50%
UNITED CONTINENTAL HOLDINGS, INC. -1.13% 31.38 Delayed Quote.-64.38%
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Financials (USD)
Sales 2020 17 390 M - -
Net income 2020 -8 182 M - -
Net Debt 2020 30 137 M - -
P/E ratio 2020 -0,61x
Yield 2020 1,08%
Capitalization 5 655 M 5 655 M -
EV / Sales 2020 2,06x
EV / Sales 2021 1,20x
Nbr of Employees 107 400
Free-Float 98,7%
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Technical analysis trends AMERICAN AIRLINES GROUP IN
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TrendsBearishNeutralNeutral
Income Statement Evolution
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Mean consensus HOLD
Number of Analysts 20
Average target price 11,97 $
Last Close Price 11,12 $
Spread / Highest target 143%
Spread / Average Target 7,65%
Spread / Lowest Target -91,0%
EPS Revisions
Managers
NameTitle
William Douglas Parker Chairman & Chief Executive Officer
Robert D. Isom President
David G. Seymour Senior Vice President-Operations
Derek J. Kerr Chief Financial & Accounting Officer, Executive VP
Maya Leibman Chief Information Officer & Executive VP
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