Industry Avolon announces cancellation of 75 Boeing 737 MAX order

Over the course of an update for the first quarter of 2020, Avolon announced the termination of a 75 aircraft strong order for the Boeing 737 MAX. Furthermore, four Airbus A330neo aircraft have been cancelled and the delivery dates for 25 narrowbody aircraft have been deferred to 2024 and beyond.

The company took this decision to preserve the cash flow in these uncertain times. The company stated that the current situation is the most challenging period in the history of commercial aviation.

Dómhnal Slattery, Avolon CEO, commented: "Our strategy has always been to operate our business with strong liquidity, low leverage, broad portfolio diversification and minimal near-term debt maturities. Those attributes mean we are well positioned to deal with the challenges presented by the current market environment; support our customers; ensure the health and well-being of our employees; and protect the long-term interests of our investors and shareholders. The Avolon management team has multi- cycle experience and it is at times of market dislocation, such as this, that the full benefit of that experience comes to the fore."

Avolon said that it holds US$ 5 billion in unrestricted cash and undrawn secured warehouse facilities. To secure this string capital base, the leasing company has decided to cancel and defer the affected aircraft orders.

"The net impact of our actions in the first quarter is to reduce our aircraft commitments in the 2020 to 2023 timeframe from 284 aircraft, as at year end, to 165 aircraft today and thereby significantly reducing our near-term capital commitments. While these actions reflect the market conditions we now face, Avolon has always maintained a flexible approach to ensure we can adapt to rapidly changing market conditions and align our business with the needs of our customers," Slattery concluded.

After these latest decisions, Avolon has 20 orders for the Boeing 737 MAX, of which three have been delivered. 14 of these aircraft are rescheduled for 2024. The company now has two Airbus A330-300s, six A320neos and 14 A321neos on order.