Bulletin
Investor Alert

Associated Press Archives | Email alerts

April 12, 2022, 8:35 p.m. EDT

Russian invasion of Ukraine leads Boeing to downgrade dozens of jet orders

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Boeing Co. (BA)
  • X
    Air Lease Corp. (AL)

or Cancel Already have a watchlist? Log In

By Associated Press

Boeing has removed 141 airplanes from its backlog of pending orders, many of them because of what it termed geopolitical considerations including restrictions on sales because of sanctions like those imposed on Russia for its war against Ukraine.

That means that Boeing now questions whether those sales will ever be completed because of sanctions.

Boeing /zigman2/quotes/208579720/composite BA +2.03% still has more than 4,200 undelivered orders. Under U.S. accounting rules, Boeing regularly adds or removes orders from the backlog, but usually only when an order is canceled or the buyer’s financial problems put the deal in jeopardy.

This time, however, the company said Tuesday that about two-thirds of the 130 Boeing 737s that it removed from the backlog resulted from geopolitical reasons, including sanctions. The move suggests that 85 to 90 sales were, in effect, downgraded to questionable because of the sanctions.

Boeing did not identify the customers. The company previously indicated that it had undelivered orders for 34 planes with Russian carriers Utair and Volga-Dnepr and seven with SkyUp Airlines of Ukraine. A company spokeswoman said planes ordered by leasing companies but destined ultimately for a Russian airline were also removed from the backlog.

In the past 10 years, Boeing has taken orders for 86 planes from Russian companies including 30 from Utair, 22 from Sberbank Leasing and six from Aeroflot , the nation’s flag carrier. Those numbers could understate Boeing’s exposure to Russia, however, because the company doesn’t always identify buyers, and Russian airlines get many of their planes from European and U.S. leasing companies — who are now scrambling to get their planes back from Russia.

Cai von Rumohr, an aerospace analyst for Cowen, said Boeing has more pressing issues than losing Russian orders, including concern that inflation, higher oil prices, the war and COVID-19 could slow the recovery in air travel and hurt demand for new planes.

“Just losing Russia, if everything else is on track, is basically not a big deal because they have a great big backlog,” he said. “But Shanghai is in lockdown (because of coronavirus) and China traffic is down, so how many planes are they going to want?”

Boeing announced the backlog changes while reporting that it took 38 net new orders for planes in March, most of them single-aisle 737 Max jets. Los Angeles-based Air Lease Corp. /zigman2/quotes/201894804/composite AL +1.79% placed an order for 32 Maxes.

Boeing Co. said it delivered 41 planes in March, including 37 737s, most of them Max models. The Chicago-based company has delivered 95 planes so far this year, providing crucial cash because airlines typically pay a large part of the purchase price on delivery.

The United States and its allies have been  imposing steadily escalating sanctions on Russia  since it invaded Ukraine in February.

Last week, Boeing’s European rival, Airbus /zigman2/quotes/208224336/delayed FR:AIR +0.02% , announced that it canceled an Aeroflot order for two planes. Airbus, which uses different accounting standards, still has an Aeroflot order for 13 planes and 14 planes for Russia’s Ilyushin Finance Co. in its backlog.

Sanctions have also forced Boeing and Airbus to stop providing aircraft parts and services to Russian airlines. Aviation consultant IBA said that Russian airlines will be able to cannibalize parts from their planes for a while, but the lack of spare parts will have “a significant impact” on them in six to 12 months.

Boeing shares rose less than 1% to close at $176.28.

/zigman2/quotes/208579720/composite
US : U.S.: NYSE
$ 178.88
+3.56 +2.03%
Volume: 6.78M
Nov. 30, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$104.49 billion
Rev. per Employee
$432,535
loading...
/zigman2/quotes/201894804/composite
US : U.S.: NYSE
$ 38.62
+0.68 +1.79%
Volume: 650,199
Nov. 30, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
2.07%
Market Cap
$4.21 billion
Rev. per Employee
$17.84M
loading...
/zigman2/quotes/208224336/delayed
FR : France: Euronext Paris
109.20
+0.02 +0.02%
Volume: 1.93M
Nov. 30, 2022 5:36p
P/E Ratio
20.72
Dividend Yield
1.37%
Market Cap
€85.97 billion
Rev. per Employee
€412,261
loading...

Get news alerts on Boeing Co. — or create your own.
This Story has 0 Comments
Be the first to comment
More News In
Industries

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.