Malaysia Airlines suspends taking delivery of Boeing 737 Max jets due to grounding

Analysts said cash-strapped carriers that over-ordered planes could take advantage of the 737 MAX grounding to negotiate with Boeing to restructure their orders. PHOTO: EPA-EFE

KUALA LUMPUR/SYDNEY (REUTERS) - Malaysia Airlines said on Wednesday (Jan 15) it has suspended taking delivery of 25 Boeing Co 737 Max jets, citing the plane's delayed return to service since it was grounded last year following two fatal crashes.

The decision represents another setback for Boeing, which on Tuesday reported its worst annual net orders in decades, along with its lowest number of plane deliveries in 11 years, as the grounding of the 737 Max saw it fall far behind main competitor Airbus.

"In view of the production stoppage and the delayed return to service of the 737-Max, Malaysia Airlines has suspended the delivery of its orders," the airline said in an e-mail.

"As there is no clarity yet from various authorities on its return to service, our technical due diligence is still ongoing," Malaysia Airlines said.

The carrier had been due to take delivery of its first 737 Max in July 2020 but last year its chief executive said the introduction to service could slide beyond that.

Malaysia Airlines did not respond immediately to a request for comment on how many of the 25 planes it has on order were due to be delivered this year.

Boeing said it was sorry for the disruption the 737 Max situation had caused Malaysia Airlines.

"We are working to support them and all of our customers in every way possible to ensure complete confidence in the 737 Max and a safe return to commercial flight," Boeing said in a statement.

The Malaysian government has been seeking a buyer for the debt-heavy airline, which is still recovering from two tragedies in 2014, when flight MH370 disappeared in what remains a mystery and flight MH17 was shot down over eastern Ukraine.

Analysts said cash-strapped carriers like Malaysia Airlines that over-ordered planes could take advantage of the 737 Max grounding to negotiate with Boeing to restructure their orders.

Virgin Australia last year said it would delay taking the first deliveries of 737 Max jets for nearly two years to reduce capital spending.

Norwegian Air Shuttle last year said its Dublin-based leasing subsidiary had reached an agreement with Boeing to postpone delivery of 14 737 Max planes that were originally due in 2020 and 2021.

Boeing on Tuesday reported a net negative of 183 orders for the 737 Max in 2019 including cancellations, but many were associated with the collapse of a major customer, India's Jet Airways.

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