Log in
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 

MarketScreener Homepage  >  News  >  Companies  >  All News

News : Companies
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors

Boeing in scramble to shore up 737 MAX financing - sources

share with twitter share with LinkedIn share with facebook
07/10/2020 | 01:45pm EDT
FILE PHOTO: Signage of The Boeing Company in Seattle

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)

By Tracy Rucinski and Tim Hepher
Stocks mentioned in the article
ChangeLast1st jan.
AIRBUS SE -0.93% 75.51 Real-time Quote.-41.62%
AMERICAN AIRLINES GROUP INC. -1.93% 13.73 Delayed Quote.-52.13%
BOC AVIATION LIMITED 6.85% 49.15 End-of-day quote.-37.98%
BOEING COMPANY (THE) 0.40% 180.13 Delayed Quote.-44.70%
UNITED CONTINENTAL HOLDINGS, INC. -1.89% 36.83 Delayed Quote.-58.19%
share with twitter share with LinkedIn share with facebook
Latest news "Companies"
01:45pZEPHYR MINERALS : Accelerates Warrant Expiry Date
01:45pZALANDO : Morgan Stanley remains Neutral
01:43pEIFFAGE : Information mensuelle relative au nombre total des droits de vote et d'actions composant le capital social
01:43pBOSSINI INTERNATIONAL : Next Day Disclosure Return - changes in issued share capital
01:43pReserve Money for the week ended August 07, 2020
01:43pOverseas Direct Investment for July 2020
01:43pUNIVERSE ENTERTAINMENT AND CULTURE : Connected transaction - provision of financial assistance to connected person
01:43pRATIONAL : Hotel & Marine Expert Summit by RATIONAL.
01:43pPROCTER & GAMBLE CO : Change in Directors or Principal Officers, Regulation FD Disclosure, Financial Statements and Exhibits (form 8-K)
01:43pRACKSPACE TECHNOLOGY : Global Announces Tender Offer for Up to $600.0 million of its 8.625% Senior Notes due 2024
Latest news "Companies"