New orders and cancellations will shift post-COVID-19 Boeing further towards defense

Following the news that CDA Aviation cancelled an order of 20 B737 MAX and the German Government ordered 45 fighter jets to Boeing;

Nicolas Jouan, Aerospace and Defense Analyst at GlobalData, a leading data and analytics company, offers his view on the future of Boeing;

“The separated but quasi-simultaneous reporting of another B737 MAX cancellation and new F/A-18 and EA-18G orders is emblematic of the current situation of Boeing. The company has plunged into turmoil since the grounding of the B737 aircraft last year following two successive crashes, which put on hold the company’s best-selling single-aisle’s order book. Since then, the MAX program has been on life support and Boeing is still officially betting on a return to flight during in 2020.

“However, the COVID-19 crisis dealt another blow to the aircraft, as more and more companies cut their order books to face the collapse of air travel. CDA Aviation is the latest of an already long series of cancellations for the B737 in 2020, and is actually second in terms of units behind Avolon, which cancelled an order of 75 aircraft.

“Meanwhile, the German press reported that the Federal Government was ordering 30 additional F/A-18 Super Hornet and 15 EA-18G Growler to Boeing in order to replace ageing Tornado and Typhoon. The two F-18 variants can conveniently fill Germany’s capability gaps without engaging in a new program such as Lockheed Martin’s F-35 as the country is also involved in its own next-generation fighter program in partnership with France: the FCAS. Boeing benefits from this, and will likely see the defense and space share of its business growing in 2020.

“Defense represented 34% of revenues against 42% for commercial airplanes in 2019, but could very well become Boeing’s most important revenue stream in 2020. More cancellations of B737 should be expected in the months to come, which will tip the balance in favour of the company’s defense portfolio.”

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