Boeing Cancellations Continue, Denting Backlog

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The COVID-19 pandemic has hit the airline industry hard, with many airlines canceling flights and cutting back on fleet sizes. As a result, aircraft producers have seen a decrease in their regular orders. Boeing, who was already struggling beforehand, continues to see cancellations rise and their overall production backlog shrink.

The company announced an additional 108 cancellations of their 737 Max jetliners which took place in April. Now, the company’s production backlog sits at 4,834 planes. This is compared to the 5,079 orders they had last month. Among those canceling orders included Gecas, which is GE’s aircraft leasing arm.

This places Boeing’s backlog at its smallest point since 2013. However, in 2018, the company did implement new accounting procedures which do allow them to take certain orders off their tally if the recipient doesn’t meet specific criteria.

Airliners and aircraft producers have both considered the COVID-19 pandemic to be the worst threat to the entire industry in recent memory. Concerns over the virus, stay-at-home orders, and the new shift of work being done has all drastically cut down on the demand for air travel. Compared to last year, air passenger traffic in the U.S. is down by a massive 90%.

Boeing’s CEO Dave Calhoun has stated that he expects it’ll take at least three years to get the industry back up to 2019 levels. It’ll be even longer until the industry begins to grow again. Calhoun also said that he believes a U.S. carrier will “likely” go out of business as a result of the pandemic but didn’t specify further.

Before the pandemic, Boeing was showing signs of recovering from their slump caused by the two fatal 737 Max crashes in March 2019, which killed a total of 346 people and led to massive cancelations. While the aircraft were grounded, the company underwent restructuring and modified the aircraft and its software to fix the issues which led to the crashes. Now, they must try and contend with keeping orders at a time where the demand has been at its lowest.