This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.
This article includes additions related to Avolon's sale-leaseback transactions and to reflect an additional nine airplanes to its unfilled order total.
Dublin, Ireland-based aircraft lessor Avolon has canceled orders for another 27 Boeing 737 Max jets scheduled for delivery between 2020 and 2022, the company said in a second-quarter business update published Tuesday. The total includes nine sale-leasebacks Avolon had planned, meaning they did not involve direct purchases from Boeing. The move follows another cancellation by Avolon in the first quarter involving 75 Max narrowbodies, leaving unfilled orders for 55 units. Avolon's total now stands at 37, including nine at other entities such as its CIT Leasing unit. The number of unfilled Max orders now stands at about 4,300, as Boeing’s 737 backlog continues to erode amid the pressures of the Covid-19 pandemic.
Boeing has said its smaller order backlog for the Max more accurately aligns the program with the “realities of the marketplace” as it works to balance supply and demand and protect the model’s underlying value, particularly in the leasing sector.
Avolon, meanwhile, has received requests from more than 80 percent of its owned and managed customer base for relief from payment obligations under their leases, it said. Those lessees account for more than 90 percent of annualized contracted rental cash flow of the owned and managed fleet. The requests have taken several forms, it added, including requests for short-term rent deferrals for part or all of the monthly rental for periods averaging three months.
Further portfolio adjustments by Avolon during the second quarter included a cancellation of an order for a single Airbus A330neo due for delivery in 2022 and deferral of delivery of three A320neos from 2020/21 to 2022.
“Q2 was a challenging period for the aviation sector as Covid-19 impacted the industry on an unprecedented global scale, bringing with it continued uncertainty around the pace and timing of a recovery,” said Avolon CEO Dómhnal Slattery. “The months ahead will be difficult, but we have the experience and balance sheet to manage through these headwinds.”
Avolon has reduced its near-term commitments for aircraft by 140 units since the start of the year, he added.