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business Monday 13 July 2020
American Airlines threatens to cancel some Boeing Max orders

By DAVID KOENIG ning of March until mid-
AP Airlines Writer April. Traffic has recovered
DALLAS (AP) — American slightly since then, but re-
Airlines is warning Boeing mains down more than 70%
that it could cancel some from a year ago. With little
overdue orders for the revenue coming in, airlines
grounded 737 Max unless are slashing spending and
the plane maker helps line preparing to furlough thou-
up new financing for the sands of workers this fall.
jets, according to people American has accepted
familiar with the discussions. $5.8 billion in federal aid to
American's stand comes as pay workers through Sept.
airlines are finding financ- 30, reached tentative
ing increasingly difficult agreement on a $4.75 bil-
and expensive as the coro- lion federal loan, and lined
navirus pandemic has crip- up billions more in avail-
pled their operations. able cash from private
American had 24 Max jets lenders to survive the travel
before they were ground- downturn. q
ed in March 2019. It has or-
ders for 76 more but wants In this May 8, 2019, file photo, workers stand near a Boeing 737 Max 8 jetliner being built for
Boeing to help arrange fi- American Airlines prior to a test flight in Renton, Wash. Associated Press
nancing for 17 planes for
which previous financing News of American's threat a sharp drop in air travel order without penalty and
has or will soon expire, ac- to cancel some orders was and a loss of interest in new recovering its down pay-
cording to three people first reported by The Wall planes. Nearly 40% of the ments now, according to
who spoke Friday on condi- Street Journal. world's passenger jets are one of the people familiar
tion of anonymity to discuss The situation underscores idled, according to avia- with the matter. The deliv-
private talks between the the strain facing airlines tion data supplier Cirium, eries have been delayed
companies. during the coronavirus as most airlines have more while Boeing works to fix
If the companies can't pandemic. It has grown planes than they need until a flight-control system sus-
reach an agreement, more difficult and expen- travel recovers. pected of playing a role in
American could use Max sive for them to finance That has made it more dif- the crashes.
financing that is about to planes. American's negoti- ficult to finance planes. Airlines have canceled or-
expire to pay for jets from ating stance doesn't reflect United Airlines and South- ders for more than 400 Max
Boeing's archrival Airbus, a loss of confidence in the west Airlines found foreign planes so far this year, and
one of the people said. plane's safety, the sources lenders who agreed in April 320 are no longer certain
Chicago-based Boeing said. and May to buy Max jets enough to count in Boe-
said in a statement that it The Max was Boeing's and lease them to the air- ing's backlog. Some were
is working with customers best-selling plane before lines, but those carriers are dropped because the air-
during "an unprecedent- crashes in Indonesia and in stronger financial situa- line buyer ran into finan-
ed time for our industry as Ethiopia killed 346 people tions than American. cial problems, while others
airlines confront a steep and led regulators around The 17 planes in dispute were swapped for different
drop in traffic," but did not the world to ground all Max were supposed to have Boeing planes. The compa-
comment on the talks with jets. been delivered to Ameri- ny had taken 4,619 orders
American. The Fort Worth, The coronavirus pandemic can at least a year ago. through May.
Texas-based airline de- has compounded Boe- That has given the airline Air travel in the U.S. fell
clined to comment. ing's problems by causing the option of canceling the about 95% from the begin-

Fed buys more corporate bonds
but may soon end purchases

By CHRISTOPHER RUGABER fett. Combined with pur-
AP Economics Writer chases from earlier in the
WASHINGTON (AP) — The month, the Fed has bought
Federal Reserve said Friday nearly $1.8 billion in corpo-
that it purchased $1.3 bil- rate debt. The purchases
lion in corporate bonds in are intended to keep in-
late June as part of its effort terest rates on corporate
to keep U.S. interest rates bonds from spiking, which
low and ensure large com- would make it harder for
panies can borrow by sell- companies to borrow by This July 31, 2019, file photo, shows the Federal Reserve logo
ing bonds. selling debt. The Fed's an- ahead of the start of a scheduled news conference by Chairman
Jerome Powell in Washington.
The Fed bought bonds is- nouncement in March that Associated Press
sued by several hundred it would, for the first time,
large companies, includ- purchase corporate debt buying bonds from a wide Last month it bought bonds
ing AT&T, PepsiCo, and quickly boosted trading range of companies to issued by UPS, Home Depot,
Berkshire Hathaway, the in corporate bonds and mimic a broad market in- oil and gas pipeline com-
conglomerate controlled brought down interest rates dex, in order to avoid fa- pany Kinder Morgan, and
by billionaire Warren Buf- in that market. The Fed is voring any specific industry. drugstore chain CVS.q