China Aircraft Leasing Cuts 26 Boeing 737 MAX Aircraft Orders

Chinese aviation lessor China Aircraft Leasing Corporation (CALC) has slashed its orders for the Boeing 737 MAX by 26 planes. The company will now take 66 MAXs from Boeing, down from a previous figure of 92.

The Chinese aviation lessor will now purchase 66 MAX planes, down from 92. Photo: Getty Images

China Aircraft Leasing reaches arrangement with Boeing

In 2017, CALC announced it had struck a deal with Boeing to purchase 737 MAX aircraft. To begin with, the order was for 50 planes, but CALC had increased its order to 92 MAXs by November 2019. After cutting its order down by 26, the new figure stands at 66 MAX aircraft.

Boeing 737 MAX, Serrated Engine Covers, Noise ReductionBoeing 737 MAX, Serrated Engine Covers, Noise Reduction
A revised delivery schedule between CALC and Boeing has been arranged. Photo: Getty Images

Additionally, the two parties have also agreed to ‘reschedule the delivery of certain aircraft,’ presumably delaying delivery of certain MAXs. According to a stock exchange statement, CALC and Boeing reached an agreement on March 25th after trading hours.

“The new arrangement is more in line with the Company’s interests, and the demand of aviation market. It also reflects its long-term partnership with the aircraft manufacturers.”

Who is China Aircraft Leasing Corporation?

China Aircraft Leasing Corporation is an aviation lessor headquartered in Hong Kong. The company describes itself as a ‘full value chain aircraft solutions provider’ as it remains involved in an aircraft’s full life-cycle, including procurement, MRO (Maintenance, Repair, and Overhaul) and disassembly.

CALC is China’s first aircraft operating lessor, established in 2006. The company has grown to become the largest independent lessor in China and one of the top ten aircraft leasing companies worldwide. According to Cirium, CALC had 95% of its fleet in operation in November 2020, the highest of any leasing company globally.

Chinese authorities are still reluctant to recertify the 737 MAX. Photo: Getty Images

Although the company made almost identical operating profits in 2020 ($122 million) compared to 2019 ($124 million), its profits attributable to shareholders were down by a huge 63%. Aircraft lessors have been forced to radically alter their business models in the wake of the pandemic, with fewer airlines willing to take on new planes in the current climate.

A large order book with Airbus remains

In January 2020, CALC increased its order with Airbus for A321neos by 40, bumping the final figure up to 66 aircraft. The company also converted an existing order of 15 Airbus A320neos to the larger A321neo. Despite the downturn in demand for new planes, CALC has shown no sign of revising its Airbus order book.

CALC recently invested in up to 60 ARJ21s from Chinese manufacturer COMAC. Photo: Getty Images.

The lessor is also procuring China-made planes after announcing a deal with COMAC for the ARJ21. In January, CALC committed to purchasing 30 ARJ21s, with a purchase option to buy another 30 on the table. CALC intends to lease the plane to clients in the Southeast Asian market, which would be the regional jet’s first overseas deployment.

The Boeing 737 MAX has not yet been recertified to fly in China. The Civil Aviation Authority of China (CAAC) was the first aviation regulator to ban the plane back in 2019. Despite other regulators, including European and American authorities, recertifying the plane in the last few months, China has claimed it wants to conduct final testing of its own before recertifying the MAX.

Do you see Chinese regulators reauthorizing the MAX any time soon? Do you think delays played a part in CALC’s decision to cut its orders down? Let us know your thoughts in the comments.

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