GE Capital Aviation Services (GECAS) and Boeing have announced a mutual agreement to restructure the lessor’s skyline orderbook for 737 MAX aircraft.
While the details of the agreement are confidential, it includes the termination of orders for 69 undelivered 737 MAX aircraft from GECAS’ orderbook.
GECAS maintains 29 MAX aircraft in its fleet and 82 on order, making it among Boeing’s largest lessor customers for this family of aircraft.
GECAS President and CEO Greg Conlon said, “Today’s agreement will help GECAS better align our available fleet with the needs of our global customer base. We remain fully committed to the 737 MAX program and our valuable, long-term partnership with Boeing.”
GECAS has further confirmed to Airline Economics that this agreement is the welcome result of ongoing negotiations with Boeing and is not related to the current COVID-19 pandemic crisis. Likewise, the lessor further confirmed that this rebalancing of its orderbook is to realign its portfolio with the needs of its customers. Financial details, such as whether refunds of pre-delivery payments for the cancelled aircraft of the transaction, remains strictly confidential. GECAS maintains that it is pleased with the final result of the negotiations.
Boeing has expressed its appreciation for GECAS’s continued commitment to the MAX program especially in light of the fact that the manufacturer has adjusted its production schedule for the MAX program.
In an official statement, Boeing said: “We have had ongoing conversations with GECAS regarding their 737 MAX portfolio and the impacts from the past year. We have come to an agreement with GECAS to restructure their MAX order book. In light of the COVID-19 pandemic, this adjustment helps to balance supply and demand with market realities, especially in the leasing channel. Additionally, since last year, where it has made sense, we have adjusted our production skyline to the fact that we are building fewer MAX airplanes than planned. Disciplined adjustments provide us with greater flexibility to manage the 4,000 outstanding 737 orders and protect the value of the MAX in the marketplace.
“We appreciate GECAS’ ongoing commitment to the 737 MAX program with more than 100 MAXs in their portfolio, including 82 unfilled orders. We look forward to delivering more MAX jets and helping them with their future fleet needs.”
This restructuring comes on the back of Avolon’s cancelled order for the MAX. Responding to Airline Economics on whether Boeing expects more customers to restructure their orders, Boeing stated: “We continue to partner with our leasing customers as they balance their portfolios to meet the evolving demands of the market. While we would rather convert a MAX order to a widebody order or defer an order as we have done in prior months, a de-booking also allows us to relieve near-term pressure on the MAX skyline. We simply aren’t building as many MAXs as we had committed to in prior years. Therefore, by making these skyline adjustments, we regain more flexibility to manage over 4,000 outstanding 737 orders and protect the value of the MAX in the marketplace. We are not going to sacrifice value to hold on to orders we can’t deliver in the near-term anyway. And in light of the COVID-19 pandemic, these moves also balance supply and demand with market realities, especially in the leasing sector.”