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Financier doubts add to Boeing's MAX headaches

Financier doubts add to Boeing's MAX headaches

25.1.2020

Financier doubts add to Boeing's MAX headaches

To restore faith in the 737 MAX, Boeing needs to prove its flagship jet is not j...

See more stories COMPENSATION Investors in Boeing shares and in MAX planes are watching closely as compensation negotiations determine how much of the financial pain of the crisis each side swallows. “Markets believe that indeed there is an enormous cost related to the situation,” said Bertrand Grabowski, an aviation banker turned independent adviser. “What isn’t clear is how much, how that will be compensated and to whom.” While several airlines have said Boeing agreed to compensate for MAX delivery delays, some lessors are arguing that falls in the value of the jet should also form part of the discussions. AerCap, the world’s largest aircraft lessor, said it was expecting Boeing to compensate it if it were forced to find new lessees for MAX jets dumped due to the delay. “Boeing will have to compensate me for that because we would be in a cancellation period and if we didn’t get that we would just cancel,” CEO Aengus Kelly said. The value of the plane will be “part of the whole thing,” he said on the sidelines of Airline Economics and Airfinance Journal conferences. Kelly noted strains in the market, saying ‘loan-to-value’ - or the share of the MAX’s purchase price that a bank will cover, may be lower than for a competing Airbus. Some lenders may try to “extract some premium” by raising borrowing costs, he added. He said “right now” banks and lessors were willing to finance the MAX, putting a floor under its value as experts say the aviation sector remains awash with funds seeking returns. “If the banks were to lose confidence, that would be different,” he added. LIFE CYCLE The second crucial concern among those financing MAX jets surrounds whether Boeing could be forced to develop a replacement before the typical 15-20 years of production. AerCap this week said it would make no sense for Boeing to replace the program until the next wave of fuel-saving technology is developed in a decade’s time. Lessors “will focus a lot on when Boeing end up having to announce a replacement - which for us as asset owners would be the key to deciding whether it’s something we want to invest in,” said Paul Sheridan, CEO of lessor AMCK Aviation. FILE PHOTO: A Boeing 737 Max aircraft taxis on the runway at the Renton Municipal Airport in Renton, Washington, U.S. January 10, 2020. REUTERS/Lindsey Wasson Seeking to allay doubts, Boeing CEO Dave Calhoun said on Wednesday he expected the MAX to be flown for a generation. But he also ordered a new market study after shelving plans for a slightly larger jet: an exercise that could encompass the market for planes like the MAX, analysts said. Editing by Mark Potter Read more: Reuters Top News

Southwest Airlines profits tumble after Boeing 737 Max grounding drove up costs“We need to get this thing done and get the Max back up in the air.” Southwest Airlines CEO Gary Kelly says there needs to be transparency and strong performance for passengers to feel confident in the safety of Boeing’s 737 Max. Let’s have the CEO’s and the Boeing execs and engineers test drive it for a few months.

Southwest Airlines fourth-quarter profit fell 21% after Boeing 737 Max grounding drove up costsSouthwest Airlines fourth-quarter profits tumbled more than 21% because of additional costs related to the grounded Boeing 737 Max.

American Airlines' profits jump despite Boeing 737 Max problems“We’re obviously disappointed to see the return to service date likely moving back,” American Airlines CEO Doug Parker says about the 737 Max. Despite the ongoing grounding, American posted higher profits in Q4.

American Airlines profit jumps despite Boeing 737 Max problems“We’re obviously disappointed to see the return to service date likely moving back,” American Airlines CEO Doug Parker says about the 737 Max. Despite the ongoing grounding, American posted higher profits in Q4. Only a fool would buy a tix on the 737 Max. Nobody is upset the return to service date got pushed back. Push it back even farther

Boeing 737 Max could be recertified before mid-year, FAA saysThe FAA could approve the 737 Max plane before mid-year, ahead of Boeing's timeline, sending shares of the manufacturer higher. And the FAA caves again. and who will fly on it ? This is all a game eh?

Sources: Boeing 737 Max could be approved for service before mid year - Business InsiderThe Boeing 737 Max, which has been grounded since March, has been taken out of the flight schedules of several major airlines through June. not sure if I want to fly in one of those just yet ok Problem lies in it's flawed aerodynamics and not the MCAS. 737MAX

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