Boeing notches key Max order, but pressure from Airbus, regulators remains
Boeing won a critical new order for its beleaguered 737 Max jets, the first purchase since two fatal accidents led to an international grounding of the fleet.
But the Chicago-based manufacturer still faces escalating pressure from rival Airbus as the company also tries to assure regulators, carriers and the public of the safety of its signature airliner.
International Consolidated Airlines Group (IAG), the parent company of British Airways, on Tuesday, said it would order up to 200 Boeing Max planes, both the Max 8 model which has crashed twice in the past year and the larger Max 10.
The announcement was made at the Paris Airshow, a biennial event that typically includes a slew of multi-billion dollar purchases for new airplanes. Currently, Boeing leads in orders with nearly $36 billion in purchases compared to Airbus' $34 billion.
Hanging over one of the industry’s largest gatherings this year, however, is juggernaut Boeing’s continued struggles. CEO Dennis Muilenburg elongated his apology tour at the event, telling reporters the firm made a "mistake" in how it handled the production of the Max jet. He remained confident the fleet will soon return to the skies.
But U.S. federal regulations have indicated it could be several more months before the airliner receives approval to begin flying again. Carriers including American Airlines and Southwest Airlines have already extended canceled flights as a result of the grounding through September.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BA | THE BOEING CO. | 152.42 | +1.69 | +1.12% |
| LUV | SOUTHWEST AIRLINES CO. | 32.36 | +0.41 | +1.27% |
| AAL | AMERICAN AIRLINES GROUP INC. | 14.64 | 0.00 | 0.00% |
Among the issues the Federal Aviation Administration is still addressing is whether pilots are strong enough to manually change the angle of the nose of the Max jet in an emergency, according to the Wall Street Journal. The same procedure used in the recent update to the 787 is mirrored in the 737 NG, which are still used by airlines around the globe for medium-range flights.
The ongoing scandal will be thrust back into the congressional spotlight on Wednesday when the House Transportation and Infrastructure Committee will hear from stakeholders including the Allied Pilots Association (APA) and the Association of Flight Attendants-CWA on the issue.
“We remained concerned about whether the new training protocol, materials and method of instruction suggested by Boeing are adequate to ensure that pilots across the globe flying the MAX fleet can do so in absolute complete safety,” APA President Dan Carey wrote in written testimony to the panel.
Meanwhile, Airbus seized on the distraction for Boeing and announced a new long-range, single-aisle jetliner that promises to open up more international routes for markets where demand may not be enough to fill the traditional wide-body jets.
Cebu Air, a budget carrier based in the Philippines, placed a $6 billion order for the new A321XLR, while Indigo Partners bought 32 of the planes. On Wednesday, American Airlines also agreed to acquire 50 of the A321s, which includes 30 conversions from a prior order and 20 new planes.
Saudi Arabian Airlines purchased 30 of Airbus' older A320neo jets in a $3.3 billion deal, while Virgin Atlantic bought 14 of the wide-body A330neo jets, a rival to Boeing's twin-engine 787 Dreamliner, for $4.1 billion.
The Netherlands-based company, however, was dealt a blow by IAG's Boeing order. Airbus is the current supplier for British Airways. Korean Air also said it would order 20 of the 787 Dreamliner.
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Overall, experts say purchase volumes are lower this year than in prior years, as concerns mount that a surge in interest in new commercial planes is fading.
The market is expected to remain robust, however, at least according to Boeing, which hiked its 20-year demand forecast beyond prior estimates.