Boeing suffers further setback as Virgin Australia delays 737 Max deliveries
Virgin Australia will delay taking deliveries of Boeing’s 737 Max for nearly two years, in a move designed to cut spending and buy the airline time to satisfy itself the plane is safe.
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Chief executive Paul Scurrah, who stepped into the role five weeks ago, said he had agreed to delay the arrival of 15 planes to give the carrier better spending flexibility and improve its credit rating. “It was certainly the first priority I walked into the business with when I got here,” he said.
A source told Reuters the airline hopes to save 1bn Australian dollars (£545m) over the next three years by deferring the purchases. Scurrah refused to be drawn on whether the savings would be used to make other investments.
Boeing is in crisis mode at the moment, with various customers including Norwegian Air and Lion Air delaying deliveries of its best-selling flagship jet. The delays come after the second of two fatal crashes in less than six months involving the plane, when an Ethiopian Airlines jet went down in early March, killing 157 people.
Virgin was planning to take its first 737 Max in November, a move which would make it the first operator of the model in the country. But Scurrah said Australia’s second-biggest airline carrier would not bring in any of the jets until he was sure they were safe.
“We are confident in the assurances that [Boeing] have given us around their commitment to safely return the MAX to service,” he said. “As a long term partner we are looking to work with them through that process.”
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Yesterday, Boeing chief executive Dennis Muilenburg promised to win back the public’s trust at the company’s annual meeting. Muilenburg faced a grilling from investors over the twin disasters and also saw off a shareholder motion to split his chairman and chief executive roles.