Also see the Updates after the jump.
LCAL canceled 16 of the 21 787s it had on order. Five of the aircraft were under contract to be delivered to Royal Jordanian, and these remain on the books to be delivered directly to the airline, we understand.
While the number of cancellations isn’t a “wow factor,” what is especially significant here is that LCAL was formed for the express purpose of being a 787 lessor. Because of the 787 program delays, canceling the order puts LCAL out of business, if the Royal Jordanian aspect of this is confirmed. (We’re working on that.)
We understand that penalties paid by Boeing, based on the delays, to LCAL are significant. Boeing attributes the cancellation to “tough challenges” and “other factors;” we understand this is really about the delays to the 787 program.
Update #1: We’ve confirmed the other five LCAL will be eventually be canceled; the commitments with Royal Jordanian and Royal Brunei need to be resolved before this happens.
Update #2: LCAL just provided us with this formal statement: (the web display may be goofy through no control of our own.)
Announcement from LCAL
LCAL has reached an agreement with Boeing on the cancellation of 16 of its 21 ordered aircraft. Whilst the economic down turn has been unhelpful there are other factors affecting LCAL’s business model, including the postponement of the originally-anticipated revenue streams from the projected operating lease activities. As a result LCAL’s shareholders are rethinking their investment strategy and there are now plans to redirect capital into different sectors.
LCAL continues to believe in the performance of the Boeing 787 and work with Boeing towards the delivery of the remaining aircraft. There is no doubt that if LCAL’s investors were to consider future capital deployment in the aviation sector, it would follow the same business model, dedicated to the Boeing 787 – which LCAL still consider to be the best new technology aircraft available for the foreseeable future.
Update #3: The newpaper The Nation in the Middle East has this article with some additional color on LCAL. The portion about LCAL begins about half-way down the article.