Finance News

American Airways says Boeing: No funding, no 737 Max deliveries

A file photo of American Airlines Boeing 737 Max aircraft.

Patrick T. Fallon | Bloomberg | Getty Images

American Airlines executives have told Boeing that they will only deliver 17 737 Max aircraft if the airline can secure funding to pay for the aircraft, CNBC said.

The 17 Max aircraft have already been built, but will not be delivered until the Federal Aviation Administration re-certifies the aircraft and removes an earthing arrangement that is expected to occur later this summer or early autumn.

When the FAA landed the Max on the ground in March 2019, it meant Boeing wasn't allowed to deliver the 17 Max planes it had built for Americans. In the 15 months since the landing, some of the 737 Max aircraft ran out of funding and were not funded.

The situation means that Boeing Capital, Boeing's finance division, needs to find a way to arrange funding for these aircraft. This could mean that Boeing Capital buys the planes and rents them to Americans.

Another possible scenario could be that third-party providers of aircraft leasing companies finance the aircraft in question.

While Boeing will not specifically comment on its discussions with American Airlines or other orders, the company told CNBC: "We continue to focus on working with global regulators on the rigorous process they have put in place to safely return the 737 MAX Commercial service. We will not comment on conversations with our customers. It is an unprecedented time for our industry as operators face a heavy decrease in traffic. We continue to work closely with our customers to support their operations and offer and Bringing demand in line with the realities of the market. "

American has already delivered 24 Max aircraft and ordered another 76 from Boeing. The Wall Street Journal previously reported that American executives have threatened to cancel some of its Max orders.

Those familiar with the talks told CNBC that the possible cancellation of deliveries only affects the 17 Max aircraft that are slated to be handed over to American this year. Orders for the remaining 59 Max aircraft have not changed and the airline has no plans to cancel them.

Earlier this summer, when the American spent more than $ 50 million a day, CFO Derek Kerr said his airline would not ship new planes unless the planes were funded under conditions that those of the pre-Covid airline 19 pandemic resembled.

The 737 Max, Boeing's bestseller, was discontinued worldwide after two accidents that killed 346 people. Boeing has since made changes to a flight control system to re-certify and fly the aircraft.

– CNBC's Meghan Reeder contributed to this article.

Related Articles