Boeing Loses Another Multi-billion Order As Saudi Airline Goes With All-Airbus Fleet
In another big hit to its already struggling bottom line, Boeing has lost yet another major customer. Saudi Arabia's low-cost airline Flyadeal announced that it will be scrapping its plans to buy planes from Boeing. The airline, which is based at the King Abdulaziz International Airport, will instead be flying all-Airbus fleet.
In December of last year, Flyadeal initially made a commitment with Boeing to purchase between 30 units to 50 units of its Boeing 737 Max aircraft. The deal was estimated to be worth more than $5.9 billion based on the list price of the aircraft during that time.
Flyadeal's decision to go with an all-Airbus fleet is another big blow to Boeing, which is still having problems getting its troubled Boeing 737 Max aircraft back into the air. Two tragic crashes of Boeing's aircraft, which happened just five months apart, caused the company's reputation and its stocks to plummet. The crash of Lion Air flight 610 and Ethiopian Airlines flight 302 killed 346 people.
The aircraft is still grounded globally and major orders for the plane have been canceled by various airlines. Some airlines have also started to demand compensation for the millions of dollars lost due to the grounding of the aircraft. Boeing has mentioned that it had already lost more than $1 billion in litigation expenses.
Apart from losing Flyadeal's business, Boeing also lost a multibillion-dollar order from Indonesia airline Garuda earlier in the year. The airline issued a statement announcing the cancellation of its order, stating that its passengers had lost confidence in the particular model, which was the main reason for the decision.
Flyadeal issued a statement on Sunday, announcing that it had already signed a contract with Airbus to purchase up to 50 units of the company's A320 Neo jets. Flyadeal didn't mention Boeing in its statement. The airline, which is a subsidiary of the Saudi Arabian Airlines Corporation, signed the deal with Airbus at the recently held Paris Air Show last month.
In response to the report of the deal between Airbus and Flyadeal, Boeing stated that it was wishing the airline well and hopes that it is successful in its future operations. Boeing also mentioned that it is currently still focusing on the safe return of its 737 Max jets into active service. The company hopes that they could resume deliveries of the planes once everything is resolved and regulators are satisfied with the fixes.
Regulators are still reviewing Boeing's proposed fix for the troubled aircraft and it is not yet clear when exactly the planes will be allowed to return to the air. Boeing has continually been struggling to satisfy regulator, which have found numerous issues with the plane's various auto-piloting system. Some analysts predict that Boeing's woes could extend into the next year, resulting in billions of additional losses.