The Boeing Company’s commercial business is facing issues. The company is having low demand for its commercial jets. It has done even lesser deliveries in May from April and has grounded its 737 MAX planes.
In May, Boeing deliveries dropped to only four planes, which is lower than six deliveries, which it did in April. In six decades this is the company’s lowest total number of deliveries. However, it is 87% fewer deliveries to customers at the same time a year ago.
Airlines pay the majority of the purchase price after receiving the plane. Therefore, deliveries are financially important to plane makers.
The company resumed its operations last week. Moreover, it plans to make deliveries for the MAX in the third quarter.
Consequently, there were about 18 order cancellations last month. This includes 14 MAX jets that were the company’s best-selling plane until a pair of crashes just over a year ago.
Aircraft leasing companies and airlines have either canceled or deferred deliveries.
The airlines that have canceled orders include Southwest Airlines, United Airlines, and Brazil’s GOL. These actions taken by the airlines are because the industry is facing a collapse in air travel since January.
The companies that canceled orders in May are three from Aviation Capital Group. Similarly, one from CIT Aviation, four From General Electric Co’s leasing division, and six unidentified customers.
However, leasing firms, who are among the largest MAX customers, controls 40% of the global fleet.
However, Boeing’s adjusted net orders sank to a negative 602 airplanes.
Boeing has received nine new orders. These orders are for wide-body planes. Its deliveries include two 777 freighters, one 737 NG (Next Generation) based aircraft for the U.S. military, and one 767 freighters, but no passenger planes.
The Pandemic Effect
As air travel is at a halt, there has been a 95% decline in the number of flights since the pandemic. Airlines are not operating their domestic flights and have canceled most of their international routes. And are terminating their operations at the airports.
Many airlines are laying off employees. Emirates, one of the world’s biggest airlines laid off hundreds of pilots and thousands of cabin crew.
Similarly, Boeing took a major step and laid off 6,700 employees from its workforce in the United States. The company has decided to lay off 10% of its workforce globally. They have also approved voluntary buyouts. The voluntary buyout will be for about 5,500 employees.
The company has planned to overall cut 16,000 jobs. The company will be laying off 4,000 more employees. The remaining number of employees the company will be laying off will be announced in the next few months.