Boeing’s Aircraft Deliveries Drop In Oct. As More 737 MAX Cancellations Hit

Boeing Co.’s aircraft deliveries declined in October, while order cancellations for its 737 MAX aircraft continued as travel restrictions tied to the coronavirus pandemic have throttled commercial jet demand.

The ailing plane maker said that last month, 12 of its 737 MAX aircraft were cancelled. China Development Bank Financial Leasing Co. canceled orders for four of its 737 aircraft, which have been grounded since March 2019 following a second crash. Three orders were scrapped by Oman Air and one by Smartwings. The report comes amid media reports that the US Federal Aviation Administration (FAA) is in the final stages of reviewing proposed changes to the 737 MAX and is set to lift its grounding order on the plane as early as Nov. 18.

Boeing (BA) delivered a total of 13 planes in October, down from 11 in September and 20 during the same month last year. In terms of customers, the planemaker last month delivered three 767 freighters to United Parcel Service, two 777 freighters to China Cargo Airlines, and one 777 to DHL, as well as one 787-8 to American Airlines, and one 787-9 to leasing company AerCap.

The aerospace company did not receive any new orders in October, as air travel demand has been disrupted in an effort to contain the coronavirus pandemic.

Total year-to-date deliveries amounted to 111 aircraft, compared to 321 during the same period last year. As of the end of October, Boeing lost a total of 1,020 plane orders this year.

The coronavirus travel restrictions have resulted in a deep cut in the number of commercial jets and services Boeing customers need over the next few years. As such, global airlines suffering billions of dollars in losses have been seeking to cancel or delay some of the orders they have with Boeing.

Shares in BA have plunged 42% year-to-date, but analysts have a cautiously optimistic Moderate Buy consensus on the stock. That’s with an average analyst price target at $181.56, indicating 3.4% downside potential lies ahead.

Following the monthly report, Cowen & Co’s Cai Rumohr remains sidelined on the stock with a $150 price target (21% downside potential), noting that BA’s 13 deliveries in October lagged Airbus’ 72, while 787 deliveries were a “disappointing” four planes.

“It’s unclear to what extent customer deferrals or manufacturing issues were the primary restraint on 787. But the weak deliveries may put pressure on BA’s announced plan to hold 787 production at 10/month until Q2:21 and then pare to six/month,” Rumohr commented. (See BA stock analysis on TipRanks)

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