United Considers Cancelling MAX 10 Orders Amid Boeing 737 Grounding

Summary

  • United states that MAX 10 orders could be canceled due to severe delays in delivery.
  • The recent grounding of Boeing’s 737 MAX 9 jets has added to the aviation giant’s woes.
  • An incident involving an Alaska Airlines plane where a cabin panel blew off during flight has led to the FAA grounding the MAX 9 indefinitely.
  • United’s decision could cause severe implications for Boeing and Airbus may face pressure to increase production to meet demand.
  • Boeing’s position on the larger benchmark MAX 10 has weakened due to issues with the MAX 9.
  • Uncertainty remains about whether regulatory approval and delivery of the largest jet from the MAX family, the MAX 10, will be delayed.

Delays in Delivery

United stated that in the best case scenario, MAX 10 deliveries are five years behind the intended delivery date. Kirby mentioned that United ordered 150 MAX 10s in 2021.

According to Kirby, during an interview with CNBC’s Squawk Box on Tuesday, the grounding of the MAX 9 seemed to be the final straw.

Boeing Jets Grounded

On Monday, United warned about a potential blow to its first quarter due to the grounding of its entire fleet of Boeing 737 MAX 9 jets earlier this month. Consequently

The decision by the U.S. Federal Aviation Administration (FAA) to ground Boeing’s MAX 9 fleet indefinitely following a mid-flight incident regarding an Alaska Airlines plane has raised safety concerns.

Potential Cancellation and Pressure on Manufacturers

Kirby’s statements indicate a possible cancellation of MAX 10 orders. However, large airlines, in practice, seldom cancel outright and prefer rearranging their order books.

Boeing did not immediately comment. United has previously suspended orders for the larger Airbus A350 jets via successive deferments.

Impact on Boeing and Airbus

Boeing could face severe consequences, and Airbus might have to step up its production of the popular A321neo if United decided against Boeing’s largest single-aisle model, which is currently facing certification delays.

Airbus was unavailable for comment. This move could potentially disrupt Boeing’s position on the larger MAX 10, where most of its future revenue rests.

Concerns over Regulatory Approval

Concerns about the MAX-9 have led to questions about potential delays in regulatory approval and the delivery of the MAX 10, the MAX family’s largest member. Boeing said it expects the MAX 10 to get certified in 2024, but the FAA did not provide immediate feedback.

Despite the grounding impact, the company predicted positive earnings for 2024, causing a 6.8% increase in its pre-market trading shares on Tuesday.

Ryanair CEO Michael O’Leary, who represents a major Boeing customer, recently mentioned his concerns about the MAX 10’s certification timeline. He ordered 150 units of MAX 10 last year.

The delivery delays, coupled with safety concerns, could affect investor confidence significantly and potentially impact the stock value of the manufacturers and airlines involved.

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