Please ensure Javascript is enabled for purposes of website accessibility

Report: American Airlines Considering Cancelling Some 737 Max Orders

By Lou Whiteman – Jul 10, 2020 at 2:42PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The airline is said to be having issues financing some of its planes.

American Airlines Group (AAL -3.93%) is reportedly considering cancelling some of the Boeing (BA -5.37%) 737 Max planes it has on order, a fresh threat to Boeing's troubled jet.

American has orders for 100 737 Max airplanes plus options for 60 more, and as recently as February, was eager to take delivery on the planes as soon as possible. But the COVID-19 pandemic has switched airlines from growth to focusing on survival, and with traffic demand down year over year the carriers are looking to shrink their fleets instead of expand.

An American Airlines 737 in flight.

Image source: American Airlines.

According to a Friday Wall Street Journal report American has threatened to cancel some of its 737 Max orders. The report said American has had issues securing financing for 17 jets it had expected Boeing to deliver this year.

The company declined comment, but American has the highest debt total in the industry and has been adding new debt in recent months to survive as it burns through about $40 million per day.

Boeing's 737 Max had issues even before the pandemic. The plane has been grounded since March 2019 following a pair of fatal accidents. Boeing hopes to have it airborne again later this year, but the company will likely find it difficult to place all the planes it has manufactured but not yet delivered.

A number of Boeing customers have already cancelled 737 Max orders this year. With each new cancellation it grows more likely Boeing will be forced to slow 737 Max production rates in 2021 and perhaps beyond as it works through its inventory backlog.

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

American Airlines Group Inc. Stock Quote
American Airlines Group Inc.
$12.21 (-3.93%) $0.50
The Boeing Company Stock Quote
The Boeing Company
$131.26 (-5.37%) $-7.45

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.