Boeing Co., whose engineers are working around the clock to get the bestselling 737 MAX back in the air, lost a $5.9 billion order for the jetliners to its largest competitor, Airbus.
The cancellation by flyadeal, the budget carrier that Saudi Arabian airline Saudia introduced two years ago, adds to the mounting costs from a worldwide grounding of the MAX after two overseas crashes killed 346 people.
U.S. airlines that flew the plane have had to alter their schedules throughout the busy summer travel season, while Boeing was forced to cut production from this year’s goal of 57 a month to 42 and book a $1 billion charge, since customers weren’t accepting deliveries until they could use the plane. Fewer shipments, which is when Boeing receives the bulk of payment from buyers, and higher costs to store completed planes, have also curbed Boeing’s cash flow.
Flyadeal, which agreed in December to order 30 of the MAX airliners with options for another 20, said at the time that it had been evaluating options for single-aisle jets to support its growth inside Saudi Arabia and potential expansion outside the country. Each of the 737 MAX aircraft would have carried 12 more passengers than the carrier’s existing fleet of single-aisle A320neo planes from Airbus.
As a result of the shift, flyadeal said it will operate an Airbus-only fleet.
Both the A320neo and the 737 MAX were launched earlier this decade in response to airline demand for more efficient aircraft as jet fuel prices surged. Airbus’ plane, which came first, has garnered more than 6,500 orders, while Boeing’s nabbed more than 4,600.
“We wish the flyadeal team well as it builds out its operations,” a spokesperson for Chicago-based Boeing said in a statement on Monday. “Our team continues to focus on safely returning the 737 Max to service and resuming deliveries of MAX airplanes.”
Last week, Boeing pledged $100 million to help families and communities of the passengers who were killed in the two MAX crashes. The money, to be paid over several years, will help with hardship and living expenses for surviving relatives as well as economic development in regions affected by the disasters, which occurred in Indonesia in October and Ethiopia in March.
Both were linked to new anti-stall software that erroneously activated during takeoff, authorities said. The subsequent sidelining of the plane tarnished Boeing’s reputation, leading to heightened scrutiny of the Federal Aviation Administration’s initial approval of the 737 MAX for commercial flights.
Boeing shares have fallen 17% to $351.12 since the second crash, while both Airbus and the broader S&P 500 have posted gains.
