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

Malaysia Airlines had been due to take delivery of its first 737 MAX aircraft in July 2020. (Reuters)
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Updated 15 January 2020

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

  • Malaysia Airlines decision represents another setback for Boeing
  • The carrier had been due to take delivery of its first 737 MAX in July 2020

KUALA LUMPUR/SYDNEY: Malaysia Airlines said on Wednesday it has suspended taking delivery of 25 Boeing 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 email.
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.
Analysts said cash-strapped carriers like Malaysian Airlines that over-ordered planes could take advantage of the 737 MAX grounding to negotiate with Boeing to restructure their orders.
Virgin Australia Holdings 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 ASA 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 cancelations, but many were associated with the collapse of a major customer, India’s Jet Airways.
Boeing did not respond immediately to a request for comment about Malaysia Airlines’ decision to suspend deliveries of its orders.
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.


Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

Updated 09 August 2020

Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

  • Aramco see’s “partial recovery” from pandemic impact
  • Aramco president says company remains resilient

DUBAI: Saudi Aramco, the world’s biggest oil company, reported a net income of $6.57bn for the second quarter of 2020, the period which witnessed the most volatile oil market conditions for many decades.

The result, announced to the Tadawul stock exchange in Riyadh where the shares are listed, compared with income of $24.7 bn last year.

Amin Nasser, president and chief executive, said: “Despite COVID-19 bringing the world to a standstill, Aramco kept going. We have proven our financial resilience and operational reliability, setting a record in our business operations, while at the same time taking steps to ensure the health and safety of our people.”

Aramco’s dividend - a big attraction for the investors who bought into the world’s biggest initial public offering last year - will remain as pledged, Nasser added. Cash flow in the quarter amounted to $6.106 bn.

““Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results. Yet we delivered solid earnings because of our low production costs, unique scale, agile workforce, and unrivalled financial and operational strength. This helped us deliver on our plan to maintain a second quarter dividend of $18.75 billion to be paid in the third quarter,” he said.

Aramco said the loss was “mainly reflecting the impact of lower crude oil prices and declining refining and chemicals margins, partly offset by a decrease in production royalties resulting from lower crude oil prices and a decrease in the royalty rate from 20 per cent to 15 per cent, lower income taxes and zakat as a result of lower earnings, and higher other income related to sales for gas products.”

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Sales and revenue in the period - which saw oil prices collapse on “Black Monday” in April - fell 57 per cent to $32.861 bn from the comparable period last year. 

Nasser said he was cautiously optimistic that the world economy was slowly recovering from the depths of the pandemic lockdowns.

“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies. Meanwhile, we continue to place people’s safety first and have adapted to the new normal, implementing wide-ranging precautions to limit the spread of COVID-19 wherever we operate.

“We are determined to emerge from the pandemic stronger and will continue making progress on our long-term strategic journey, through ongoing investments in our business – which has one of the lowest upstream carbon footprints in the world,” he added.

Aramco expects capital expenditure to be at the lower end of the $25bn to $30bn range it has already indicated for this year.