Boeing $5.9bn setback after Saudi airline scraps order for 737 MAX planes

(qlmbusinessnews.com via news.sky.com– Mon, 8th July 2019) London, Uk – –

After two deadly crashes involving Boeing 737 MAXs, budget airline flyadeal will take delivery of a fleet of 30 Airbus A320 jets.

US plane maker Boeing has suffered a fresh setback after a Saudi budget airline chose not to go through with a $5.9bn (£4.7bn) order for 30 of its 737 MAX aircraft.

The decision by flyadeal comes after two 737 MAXs were involved in deadly crashes in 2018 and earlier this year.

A total of 346 people were killed in the Lion Air disaster in Indonesia last October and the Ethiopian Airlines tragedy near Addis Ababa in March, which led to all such aircraft being grounded and billions of dollars being wiped off the company's value.

Flyadeal has now had a rethink about the provisional Boeing order and decided instead to take delivery of a fleet of 30 rival Airbus A320neo jets.

The Saudi airline said: “This order will result in flyadeal operating an all-Airbus A320 fleet in the future.”

Flyadeal, which has operated leased A320 jets since launching in September 2017, will take delivery of the new Airbus aircraft from 2021.

The announcement comes just weeks after International Airlines Group – the owner of British Airways – signed a letter of intent to order 200 Boeing 737 MAX jets.

IAG – which also owns Spain's Iberia and Ireland's Aer Lingus – said it had every confidence in Boeing and expected the MAX to return to service in coming months.

The deal – worth more than $24bn (£19.1bn) at list prices though likely to have been reduced in negotiations between the two companies – would see the aircraft delivered between 2023 and 2027.

However, Oman Air warned in June it would hold talks with Airbus if Boeing did not provide support and recovery for the MAX.

Meanwhile, Emirati carrier flydubai said in April it could order A320s as replacements for the MAX jets.

A Boeing spokesperson said: “We understand that flyadeal will not finalise its commitment to the 737 MAX at this time given the airline's schedule requirements.”

After the two crashes, US investigators reportedly found a new potential flaw in the 737 MAX software update that was designed to improve safety.

The company has been working on a software fix to try to return the jets to service by the end of the year.

The 737 MAX remains grounded worldwide and regulators must approve the fix and new pilot training before the jets can fly again.