News Briefs – January 17, 2020

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Croatia launches international bid to buy fighter squadron

NATO-member Croatia said Jan. 15 it has approached seven other countries to buy a squadron of multi-role fighter jets for its air force.
The Croatian government bid for a dozen used or new aircraft has been sent to the U.S., Sweden, France, Italy, Norway, Greece and Israel.
The wish list includes American, Israeli, Norwegian and Greek F-16s, the Swedish Saab JAS Gripen, the French Rafale and Italy’s Eurofighter jets.
Last year Croatia opted for 12 used Israeli F-16 fighter jets, but the $500 million deal fell through.
Washington had insisted on Israel stripping off upgrades that were added after Israel took delivery of the aircraft from the U.S. some 30 years ago.
The sophisticated electronics and radar systems were crucial in Croatia’s decision to buy the F-16s from Israel instead of from the U.S. or Greece, which had also bid for the contract.
Croatia’s government said it expects to receive the new offers by May and make the decision by August.
Croatia faces a mini arms race with neighboring Russian ally Serbia, which recently received 10 used Russian MiG-29 fighter jets.
Croatia joined NATO in 2009 and the European Union in 2013. AP
 

Max crisis: Boeing airplane orders plunge to a 16-year low

Boeing orders and deliveries of new jetliners plunged last year as the company struggled with the worldwide grounding of the 737 Max, which had been its best-selling plane.
Gross orders fell to their lowest mark in 16 years, and that tells only part of the story. Boeing reported more cancellations than new orders in 2019, in large part because a major order from India’s Jet Airways almost certainly vanished when the airline went bankrupt.
The Chicago company said Jan. 14 that it booked 246 gross orders, the lowest total since 2003, but after cancellations the number of net orders was just 54.
And after subtracting other orders that are too doubtful to stay in Boeing’s backlog — the Jet Airways deal — the company suffered a net loss of 87 orders last year.
Deliveries also tumbled, falling 53 percent from 806 planes in 2018 to 380 last year. That left Boeing far behind European rival Airbus, with 863 deliveries, in the race for global supremacy in plane building.
The 737 Max was Boeing’s best-selling plane until two of them crashed five months apart, killing 346 people and prompting regulators around the world the ground the plane last March. The company lists 4,545 unfilled orders for the Max, a backlog that would take several years to work down.
However, Boeing is pausing production of the Max because it is unclear when the plane will fly again. Boeing is still making changes to software and other systems, and the Federal Aviation Administration has said repeatedly that it has no timetable for approving Boeing’s work.
In a sign of changing expectations around the plane’s return, American Airlines said Jan. 14 that it is removing the Max from its schedule for two more months, until early June, and expects to cancel 140 flights a day until then.
American has 24 Max jets and expected to have 40 by the end of last year and another 10 this year. Without the planes, it canceled about 36,000 flights last year and expects to cancel nearly 21,000 through June 3.
The airline has estimated that the grounding cost it $540 million in pretax income during 2019 — a figure that American could update when it reports fourth-quarter results next week. The Fort Worth, Texas-based carrier said last week it reached a settlement with Boeing over compensation for 2019 grounding-related damages, but didn’t disclose financial details.
American’s schedule for a June return of the Max puts it in line with United Airlines. Southwest Airlines, which has more Max jets than American or United, has removed the plane from its schedule through April 13. AP
 

Moody’s downgrades debt rating for largest Boeing supplier

Moody’s Investors Service announced that it is downgrading the debt rating for Spirit AeroSystems, Inc. to junk-bond status after the major supplier of fuselages for Boeing’s troubled 737 Max announced massive layoffs last week.
The Jan. 13 downgrade comes after Spirit announced Jan. 10 that it was laying off 2,800 workers in Wichita and that it planned smaller workforce reductions later this month at its plants in Tulsa and McAlester, Okla.
“The downgrade reflects our expectation that Spirits liquidity profile will quickly and materially erode in the absence of mitigating developments that remain largely out of the company’s control,” said Eoin Roche, Moody’s lead analyst for Spirit.
Spirit produced about 70 percent of the 737 Max, including the fuselage and other major components. Contracts with Boeing for the Max represents more than half of Spirit’s annual income. Spirit halted production of fuselages and other parts for the Max on Jan. 1, after Boeing told Spirit to suspend shipments.
Moody’s said recent events led it to assert that the company’s earnings and cash generating capability had weakened meaningfully relative to historical trends and prior expectations, and would likely remain as such for at least the next two years. It said the layoffs suggest ongoing risk and operational disruption to what is now expected to be a much slower resumption of production.
The layoffs were announced the day after documents became public showing that Boeing employees raised doubts about the safety of the 737 Max, apparently tried to hide problems from federal regulators, and ridiculed those responsible for designing and overseeing the jetliner. The Max was grounded in March following two deadly crashes. AP

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