We won’t take Boeing’s 737 Max unless we need th

United Airlines Holdings, Inc. (UAL) said the company is currently discussing with Boeing Inc. (BA) the timing of delivery for previously ordered 737 Max aircraft, and will hold off on taking deliveries unless the aircraft are needed and fully financed.

“With respect to our new aircraft commitments, if the 737 Max is ungrounded later this year, we expect to take delivery of 16 Max aircraft this year,” Gerry Laderman, United’s Chief Financial Officer, said Friday during the company’s quarterly earnings call. 

Laderman added that the deliveries remain subject to lease financing agreements entered into for 22 total aircraft scheduled for delivery this year. An additional 24 Max planes are scheduled for delivery in 2021, with 131 more for 2022 and beyond. 

“We are discussing the timing of these deliveries with Boeing,” Laderman said. “However, one thing is certain – I do not anticipate taking any of those aircraft, unless and until we need them.” 

A flight board at George Bush Intercontinental Airport displays many cancelled flights Tuesday, March 31, 2020, in Houston. Airlines have reduced the number of flights they are operating during the coronavirus outbreak. (AP Photo/David J. Phillip)

On April 14, Boeing reported that orders for 150 Max jets had been cancelled in March, bringing net cancellations for the month across its aircraft lines to 119. Net cancellations for the first quarter totaled 307 planes.

The total number of Max planes currently set for delivery to United by the end of 2021 represents less than half of those scheduled before production of the aircraft was slowed due to its worldwide grounding by international aviation regulators in 2019 following two fatal crashes, Laderman said. 

“Production on all of these aircraft had basically started before the crisis, so it would have been financially impractical to reschedule,” Laderman said. “However, since we will not take delivery of any of these aircraft unless fully financed, these deliveries will not be a cash drain for us.” 

United president Scott Kirby said on the call that the novel coronavirus continues to threaten zero net passenger revenue for the airline, with no way to predict when the crisis will end. Starting on Friday, the company’s flight schedule was reduced to 90% of its regular capacity.

“We’re going to have to do something that has been historically very difficult for the airline business, which is to be flexible in an industry where we’ve got huge fixed costs related to infrastructure and equipment and labor. So all this is really hard and it’s unprecedented, what we’re trying to deal with here,” Kirby said.

On Thursday, Boeing announced it would raise needed liquidity through a $25 million, seven-part bond offering, after announcing plans on Wednesday to cut its workforce by 10%. The company posted a $641 million loss in the first quarter.

“As a result of the [bond offering] response, and pending the closure of this transaction expected Monday, May 4, we do not plan to seek additional funding through the capital markets or the U.S. government options at this time,” the company said in a press release Thursday.

On Friday afternoon, shares of Boeing traded around $134, down approximately 4.7% from the prior day’s session.

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