Within a week of Norwegian Air Shuttle cancelling an order for 92 of the 737 MAX, aircraft lessor BOC Aviation cancelling an order for 30 of the jets and subsequent to its April cancellation of 75 ordered 737 MAX jets, aircraft lessor Avolon has announced it is cancelling orders for a further 27 of the aircraft.
The Ireland-based lessor has cut its near-term commitments by more than 140 aircraft since the beginning of the year. While the 737 MAX has remained grounded since March 2019 after two fatal crashes while it looks to fix identified problems and obtain the required certification for airworthiness, the recent spate of cancellations have been a result of the massive downturn in demand for air travel since the world was hit by the COVID-19 pandemic.
As the pandemic began to hit air travel in February of this year, combined order cancellations for the 737 MAX have reached a total of 471. Of these 27 cancelled jets, nine had been earmarked for sale-and-leaseback deals, though the lessor still has 37 MAX jets on order. Terms have been agreed with regard to a restructuring of the delivery of these jets as Boeing looks to “balance supply and demand with market realities” resulting from the COVID-19 pandemic. The U.S. planemaker still has a substantial backlog of orders for the troubled jet, though production has recently been brought to a halt.
In an end-of-second-quarter financial update, Avolon confirmed that it currently has in excess of US$5 billion in liquidity, having reduced its capital commitments to the end of 2021 by one-third and since the start of the year had cut its 2020-23 capital commitments by over a half.
