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Boeing seems to be fragile at the moment, a great number of 737 Max orders are canceled. BA stock is falling.
Boeing Co (NYSE: BA) may face a tough year ahead, its stock is seriously down. This is because of the recent scrapped orders for its 737 Max. Sources report that the planemaker suffered a greater number of plane cancellations in February. This is also coming as the company is facing market scrutiny after two crashes of its greatest selling plane last year.
Across the board, orders were in the decline sources say. Conversions to larger orders are also a part of the mix. Oman Air, for instance, exchanged 10 Maxes for 4 787s. Airlease also did the same for nine max planes to three 787s.
This has so far brought Boeing negative net sales. About 18 gross orders have come in. 46 cancellations as well. The net of 28 cancellations is not a good sign for the business.
Boeing Faces Unique Challenges, Its Stock Is Down
Boeing has had its unique share of challenges recently. Many сountries grounded the Boeing 737 Max last year. This happened after two crashes that cast doubts among the aviation community. The crashes occurred within five months of each other. With a total of 346 fatalities, it sparked fears among many about the safety of Boeing’s planes.
The сompany lost its sales momentum as orders tanked last year. Production was temporarily halted in January. The planemaker has high hopes of approval by regulators by the middle of the year.
This, however, may be dampened by the emergence of COVID-19. The travel industry is already in the middle of a downward spiral due to the сoronavirus. Airlines appear to be the worst hit as canceled orders and even whole routes have littered the global landscape.
This seems to be taking its toll on Boeing too. It has reportedly accessed a $13 billion line of credit. This was obtained in January. Sources say that the line of credit will be used to keep things in order until everything pans out.
Airline Industry Has Grown Tremendously
On a general note, things seem to be going in reverse for planemakers. Boeing and competitors such as Airbus SE (EPA: AIR) and Embraer have had a great run for the past ten years. The numbers show that plane orders in the last decade make up about 30% of all planes ever made.
After the last health situation, plane makers took off. Now, the latest health situation seems to cause greater panic than the previous ones. This is due to the increase in the number of deaths and infected.
Travel restrictions are also causing further damage to the industry. This will hurt the introduction of new models. As such, airplane manufacturers may be in for a longer period of change than most.
Boeing seems to be fragile at the moment but as recent history has shown, it can bounce back and lead the industry to new heights in aviation. As at the time of filing this report, Boeing (BA) stock prices stood at $189.08. This is an 18.15% decline in prices since the last trading session. In the premarket, it is falling even more. It is at $172.80 (-8.61%).