Boeing Is Said to Reach Accord With 737 MAX Engine Suppliers

Boeing agreed to cover the cost of jet engines made for the grounded 737 MAX, according to one of makers of the engines.
Author:
Publish date:

Boeing  (BA) - Get Report agreed to cover the cost of jet engines made for the grounded 737 MAX, according to one of makers of the engines.

General Electric  (GE) - Get Report and Safran  (SAFRY)  of France have a joint venture that makes the Leap-1B engines for the 737 MAX. 

Safran executives disclosed the agreement during the company’s quarterly earnings call on Thursday. The accord was reached earlier this week.

As part of the agreement, all the engines that are going to be delivered in 2020 will be fully paid for. Additionally, Boeing will cover payments for engines that were delivered in 2019.

Boeing reported zero net orders in January, the first time since 1962 that the company didn't receive a plane order in January, according to Reuters.

Boeing had a disastrous period after the 737 MAX crashed twice - in October 2018 and March 2019. The plane was grounded worldwide, which weighed on the company’s plane deliveries. 

Boeing delivered 13 planes to customers last month, Reuters reported. A year earlier, it took in 45 orders after cancellations in January and delivered 46 planes.

For comparison, Airbus  (EADSY) , Boeing’s chief rival, had a total of 274 orders in January, after taking cancellations into account, Reuters reported. That was the Paris company's biggest January in at least 15 years, the news service reported.

Earlier this month, Boeing set the size of a bridge loan at $13 billion to provide the Chicago company with the financial flexibility it needs to get past the 737 MAX grounding. 

GE shares at last check were down 2.4% at $10.69 while Boeing shares fell 3.9% to $293.74.