No change in Boeing 737 MAX orders, says leasing firm

China Aircraft Leasing Group Holdings Ltd, a Hong Kong-listed aircraft leasing company, denied earlier media reports about its plan to suspend the orders of 100 of the Boeing 737 MAX aircraft, and it said on Tuesday that there is no change in the orders and no plans to stop the payment.

The 100 737 MAX aircraft are expected to be delivered between 2023 and 2025. The company said it feels deeply sorry about the issues regarding the 737 MAX.

"We are in close communications with Boeing, and there is no change in the orders for the moment. Currently, we don't have any 737 MAX in our fleet, so it doesn't have any impact on our operations," the aircraft lessor said.

Meanwhile, ICBC Leasing Co Ltd, China's largest aircraft leasing company by assets, said Boeing 737s are mainstream aircraft in the current market. ICBC Leasing has delivered a small number of 737 MAX 8 aircraft to its clients.

"Currently, all the aircraft leasing contracts are implemented normally. We will follow the issue closely and keep timely communication with related parties," ICBC Leasing said in a statement on Tuesday.

Now, there are 96 Boeing 737 MAX aircraft that have been grounded in China, and China was the first country to remove the aircraft from commercial flights before other nations around the world, including the United States. The 737 MAX is the fastest-selling airplane in the history of Boeing with about 5,000 orders from more than 100 customers worldwide.

Bank of America Merrill Lynch on Monday downgraded Boeing's stock to "neutral" from "buy" and cut its price target to $420 a share from $480 after the crash of two MAX jets six months apart.

The downgrade followed Boeing's announcement on April 3 that it planned to cut production of 737 MAX jets to 42 a month from 52 starting in mid-April, a reduction of nearly 20 percent.

The investment bank now estimates delays in returning the aircraft to service will last six to nine months rather than the originally estimated three to six months.

"The reputational loss from these events could erode the long-term market share and pricing power of the 737 MAX," Bank of America Merrill Lynch analyst Ronald Epstein said in a research report.

"A six-month delay also means lower margins due to penalties owed to customers, a weaker negotiating position with airlines as airlines consider cancellations, and operational inefficiencies from the production disruption."

The downgrade of Boeing's stock follows the crashes of Ethiopian Airline Flight 302 on March 10 and Lion Air Flight 610 on Oct 29, 2018. A total of 346 passengers and crew died in the crashes. Critics have raised questions about oversight provided by the US Federal Aviation Administration and its decision to certify the 737 MAX safe for commercial use.

The cause of the two crashes has not yet been determined. Boeing said a malfunctioning sensor may have triggered the crashes.