Industry reports indicate that Boeing has been forcing its leasing company customers to continue progress payments for aircraft, despite having their MAX fleets grounded and not earning income. The last thing a leasing company wants to do when losing revenue is to continue to make progress payments on future aircraft. Boeing’s attitude is that a contract is a contract, until they breach it, is not sitting well with the international aircraft financing community. We’re already seeing some lessors trade 737 MAX orders for 787s, and that trend will likely continue if the MAX is not well received by the public.
What is also not sitting well with lessors is Boeing’s most recent discounting to price levels that existing lessors will find difficult to match given what they paid for aircraft prior to the accidents. At that time, the aircraft was in high demand and commanding rents of $350K per month. Today, after the fatal crashes that cost 346 lives, that is no longer the case.
The industry rumor mill is that Boeing is offering aircraft at very low prices, the equivalent of $275K per month, and still finding no takers for the MAX. That is not a good sign for the program’s future, and points to the uncertainty in the market about whether the aircraft can achieve profitability in an era of social media and increased consumer awareness.
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