Coverage: Saudi airline cancels Boeing 737 MAX order

Saudi state-owned airline flydeal canceled an order for Boeing’s controversial 737 MAX jets replacing them with Airbus A320neos.

The Wall Street Journal’s Robert Wall had the news:

Boeing Co. Sunday lost a deal for 737 Max jetliners in one of the first tangible signs the crisis around the plane could shift business to European rival Airbus SE.

Saudi Arabia’s flyadeal Sunday said it would buy up to 50 Airbus A320neo planes, the direct rival to Boeing’s BA, -1.57% Max, which has been idled globally in the wake of two crashes within five months.

The deal between the discount arm of flag carrier Saudi Arabian Airlines Corp., or Saudia, has a value of more than $5.5 billion, based on Airbus EADSY, -1.30% list prices that don’t include industry-standard discounts.

Sinead Baker had the details for Business Insider:

Saudi Arabian airline Flyadeal reversed its plans to buy 50 of the 737 Max jets, announcing on Sunday that it will order up to 50 planes from Airbus’ A320neo family — the Max’s rival.

It said its parent company, Saudi Arabian Airlines Corporation, made the deal at the Paris Air Show in June, and that the allocation of the planes to Flyadeal will mean that the airline has an all-Airbus fleet.

Boeing had announced in December that the airline had committed to buying up to 50 Boeing 737 Max jets — a deal worth up to $5.9 billion at list price. Boeing said at the time: “While Flyadeal has been operating new Airbus A320s, the airline says it has selected the 737 MAX for the future.”

Boeing is facing a confidence crisis in its 737 Max plane after two fatal crashes killed 346 people, leaving the planes grounded around the world and airlines looking for compensation.

Customers have also expressed fears about the plane — a June poll found that 41% of Americans wouldn’t consider flying on the plane until it had been safely back in service for at least six months.

CNN’s Danielle Wiener-Bronner quoted a Boeing spokesperson as saying

“We wish the flyadeal team well as it builds out its operations,” a Boeing (BA) spokesperson said on Sunday adding that “our team continues to focus on safely returning the 737 MAX to service and resuming deliveries of MAX airplanes.”

Earlier this year, Indonesian airline Garuda canceled a multibillion-dollar order for 737 Max 8 jets. “Our passengers have lost confidence to fly with the Max 8,” Garuda spokesperson Ikhsan Rosan told CNN in March.

It’s not clear when the grounded passenger jets will start flying again, but it’s likely that Boeing’s crisis will extend into next year.