General Electric Co’s (GE.N) aircraft leasing subsidiary on Friday canceled 69 orders for Boeing Co’s (BA.N) grounded 737 MAX jets as it evaluates its order book during the coronavirus pandemic, the latest setback for the U.S. planemaker.
The unit, GECAS, maintains 29 MAX aircraft in its fleet and has an additional 82 jets still on order from Boeing, it said. Demand for airplanes has taken a beating as the pandemic has brought air travel to a virtual halt, forcing several airlines to defer deliveries of planes to a later date.
Boeing halted production of the MAX in January after two fatal crashes in five months forced the plane’s grounding in March 2019. Boeing has said it hopes to win approval from the U.S. Federal Aviation Administration to return the plane to service in mid-2020.
“Today’s agreement will help GECAS better align our available fleet with the needs of our global customer base,” Greg Conlon, chief executive officer of GECAS, said in a statement.
The move comes days after Boeing posted 150 737 MAX cancellations in March, including 75 previously reported from Irish leasing company Avolon. The remaining 75 cancellations were from buyers including Brazil’s GOL (GOLL4.SA).
Boeing said on Friday it had “come to an agreement with GECAS to restructure their MAX order book.”
“In light of the COVID-19 pandemic, this adjustment helps to balance supply and demand with market realities, especially in the leasing channel,” Boeing said, referring to the respiratory disease caused by the virus.
Boeing added that “disciplined adjustments provide us with greater flexibility to manage the 4,000 outstanding 737 orders and protect the value of the MAX in the marketplace.”
Boeing shares rose 12% Friday on news that the company plans to resume commercial plane production next week in Washington state.
The company this month said it will make two new software updates to the 737 MAX’s flight control computer to address two new issues. A key certification test flight is not expected now until late May at the earliest.