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Boeing offers discounts and bulk-buy deals in wake of 737 Max crashes

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Boeing is offering huge discounts, bulk-buy deals and maintenance packages to airlines as it fights to hold onto 737 Max orders after the aircraft was grounded following two crashes. (www.telegraph.co.uk) More...

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pilot62
This would be a great post if i could read the article without signing up ....
racerxx
racerxx 4
Paywalled :(
nasdisco
Chris B 6
Surely this risks the EEC making dumping claims against Boeing.

Then we'll start the whole trade war thing again.
rapidwolve
rapidwolve 2
Found this article which seems to mirror what I think Telegraph said. It would have been nice if we could have read the whole thing via Telegraph

https://www.investors.com/news/boeing-737-max-discounts-offered-2019-order-decline/?src=A00220&yptr=yahoo

I presume they love stepping in their own #2, since it seems that is what is going to happen once Airbus, and others, notice the "dumping" "The massive deal is worth $24 billion at list prices. But the Telegraph reported that the deal will include an unprecedented 50% discount.
"It's rumored IAG will pay virtually nothing for its order, with Boeing offering maintenance as well," No wonder Willie was so quick to sign a LOI.
upchucked
Boeing will lose money on every deal, but will make it up on volume!
rapidwolve
rapidwolve 2
That is not the point. Boeing is/was very very adamant that Airbus was dumping and Bombardier was dumping, yet now the shoe is on the other foot. There is no way anyone will let that scrape by, so no, they won't make up for it on volume.
patpylot
increasingly flexible terms mixed with more and more give-aways is a signal the seller is terrified. Any buyer can sit it out for even better terms. Wonder what the break-even ship number is now, and what it will be months from now for the 737max bucking bronco.....
upchucked
Boeing's delivery number for 2019 was 380, about half of normal. That, of course, doesn't include the 400 MAX they built but can sell or fly. Moses Lake Airport is so packed with built, but grounded planes, one has to wonder if it is still in operation.
harish86
Even if they get it flying again, will the traveling public really have confidence to fly in one, especially in the first few months of re-introduction.
COYOTEHUNTER
Of the post I've seen, 50%-52% of those surveyed said they would ride on the MAX.
This is far better than what I thought the results might have been.
As alluded to in my other post, I believe Boeing may now have this aircraft to where it should have been in the first place.
COYOTEHUNTER
Management has not given their sales people much to work with except to promise they now have a better product.
On the plus side, you can offer the most heavily scrutinized, re-worked, re-tested, re-certified aircraft in aviation.
Time will tell.
paultrubits
BOGO?

upchucked
Here is the article, absent the photos:

Boeing offers discounts and bulk-buy deals in wake of 737 Max crashes

Alan Tovey, industry editor
13 JANUARY 2020

Boeing is offering huge discounts, bulk-buy deals and maintenance packages to airlines as it fights to hold onto 737 Max orders after the aircraft was grounded following two crashes. Airlines rarely pay the full price for new aircraft, but experts say the crisis at Boeing in the wake of the safety scandal has driven price cutting to new levels. Alex Macheras, an airline analyst, said: “Boeing’s worried and so very generous incentives and substantial discounts are being offered.

“Airline executives in South America and South East Asia have told me they’ve been offered deals on small sales that are normally only given on really big orders, ones in the hundreds.” Boeing has been thrown into crisis by the Max crashes, which cost 346 lives. The jets were taken out of service after the second incident in March, with the losses blamed on a new control system installed on the jets. Since then the US aerospace giant has racked up huge bills, as airlines demand compensation for jets they cannot use or take delivery of.

The chaos cost former boss Dennis Muilenburg his job and sparked global outrage which led US senators to label the jets "flying coffins".

Insiders describe the company as “haemorrhaging” money. So far Boeing has put the bill for the crisis at almost $10bn (£8.6bn) but this is just the starting point as the company tries to get the Max fixed and back in the air. Boeing had been hoping to return the Max to flight by the end of last year. Predictions of a spring return now look optimistic and some major Max customers have removed the aircraft from their summer schedules.

New analysis by aviation economist Chris Tarry calculates that Boeing faces a $1bn-a-month bill until the Max flies again. To try to reduce costs, the company has now halted production of the aircraft. The firm had originally been building almost 50 a month and has run out of room to store grounded jets, stashing dozens in the staff car park at its Seattle headquarters.

With a price-tag of about $120m, the Max is Boeing’s bestselling aircraft with almost 5,000 on order. However, sales have slowed since the grounding and about 200 have been lost as airlines folded or swapped to other models.

One major deal was struck at the Paris airshow last June, when British Airways parent IAG signed a loose “letter of intent” for 200 Max jets at a rumoured 50%+ discount, an almost unprecedented level.

John Strickland, an airline consultant, said: “Discounting is murky but IAG chief executive Willie Walsh really picked his moment there. “Having a customer like IAG appear on the order really sent a positive message.”[/i] Mr Tarry added: [i]“The Max is in such a vital market segment for Boeing that everything is negotiable. Discounts normally only seen on launch and big orders are likely.”

With Boeing’s balance sheet under pressure, it is not just discounts that are being offered, according to Mr Macheras.

He said: “It’s rumoured IAG will pay virtually nothing for its order, with Boeing offering maintenance as well. All this has long-term financial ramifications for Boeing but the company is totally focused on the Max - it’s such an important aircraft to the company.”

Boeing said: “We do not comment on our private discussions with customers.”

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