Boeing usurped by European rival Airbus

Cancellation is one of the first tangible signs the crisis around the 737 Max jets could shift business to European rival Airbus

Saudi Arabia’s flyadeal is terminating a prior order for Boeing’s 737 Max jet and is switching to European rival Airbus, in what is seen as the latest blow to the American manufacturer as it seeks to return the beleaguered fleet to flight after two fatal crashes. The budget airline, which in December said it would purchase 50 Max jets, announced on Monday that it will instead purchase 50 Airbus A320neo narrow-body jets, a direct rival to Boeing’s update to the popular 737 airliner.

Deliveries for the nearly $6bn deal will begin in 2021, flyadeal said in a statement, and will eventually lead to Airbus A320 being the exclusive jet for the carrier.

This is the first major airline that decides on replacing Boeing and it comes as the Chicago-based manufacturer is still struggling to return the 737 Max jets to service and resume deliveries after they have been grounded following to two fatal plane crashes in a five-month span. In the case of both accidents - the first involving a Lion Air flight last October, the second of an Ethiopian Airlines flight in March - investigators have pointed the finger at software intended to prevent the plane from stalling on ascents. The system, called MCAS, was supposed to help stabilise flight trajectory but twice sent Max jets into fatal nosedives. As a result, the fleet of Max aircraft were grounded worldwide in March, and Boeing has slowed production of the new model while its engineers work on a fix.

Following the grounding, Boeing initially said the Max would be back in the air by May, but internal and government investigators have uncovered other problems, some related to the initial fix proposed for the MCAS, that have pushed the timeline back by months. And just last week, European regulators raised concern about a previously undiscovered problem with the plane’s autopilot capability, raising the possibility of an even longer delay before the Max is airborne again.

As analysts say, this means that Boeing has now a fast shrinking window of time to get the Max fixed and flying before it risks serious harm to its business. Otherwise, the company would suffer far more order cancellations in favour of its rival Airbus.

In May, for example, Barclays analysts said the results of an internal poll of more than 1,700 North American and European travelers found that almost half said they wouldn’t take a flight on a Max model for more than a year after the planes - which are now expected to remain grounded until at least September, according to Boeing - resume service. And more than half said that if they had the choice to fly on a Max or another type of aircraft, all other things being equal, they would avoid the Max.

There are also already undergoing undisclosed negotiations with Airbus and even though the European plane maker doesn’t have the production capacity to take much market share away from Boeing right now, analysts say, that could change. 

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