Aug. 22, 2023, © Leeham News: We have a follow up to our Aug. 9 post about Boeing revealing the sub-type orders for the first time for the 737 MAX and 777X.
Boeing every month updates its website data for gross orders, cancellations and orders classified under an accounting rule called ASC 606. ASC 606 means orders are “iffy” for contractual or financial reasons with the customer.
The difference between gross orders and net orders represents cancellations, for whatever reason. The airline or lessor may have decided to cancel outright. Some orders might have been swapped within the family (for example, from a 737-8 to a 737-10). Some orders may have been swapped (cancelled) between models—for example, from the MAX to the 787. Boeing’s cumulative statistics haven’t revealed the difference between gross and net orders—until now.
ASC 606-classified order adjustments are excluded from the gross/net tally, Boeing tells me. In other words, for purposes of the tallies, the ASC 606 orders remain included in the gross numbers. They’re still orders at this stage, even if iffy. Airbus, operating under European accounting rules, doesn’t have to identify its iffy orders; LNA has made its best estimate for years of Airbus “iffy” orders, however, in an effort to level the publicly reported playing field. There are times when discussing orders and backlogs that we ignore Boeing’s ASC 606 classification when comparing with the Airbus orders.
With this as background, let’s get to the follow up to the Aug. 9 post.
For starters, Boeing only confirmed that ASC 606 data is not included in its first-ever sub-type reveal. But a Boeing spokesperson also said she would not comment on the math displayed below. The math is simple. We took the gross orders and subtracted the sum of the stated backlogs and deliveries to arrive at how many cancellations, including order swaps, have been recorded for each family member.
Boeing doesn’t break out the swaps or the aggregate cancellations. But it is public knowledge that, for example, Southwest Airlines swapped some 737-7 orders for the larger 737-8. We also know that when the 737-10 program was launched in 2013, United Airlines swapped 737-8 and 737-9 orders for the 737-10. During the extended, 21-month grounding of the MAX, we know that Air Lease Corp. swapped some MAX orders for 787s.
We know that during the COVID pandemic, some airlines ceased operations, leaving Boeing with an inventory of MAXes that were built and a hole in the order book.
For the 777X, some 777-8 passenger models were swapped for the 777-8F by Qatar Airways and by Emirates Airline for the 777-9. The future of the 777-8P relies on the future of the 777-8F, in our estimation. Both airplanes dimensionally are now the same. But with only eight firm orders today for the -8P, production seems unlikely absent new orders for this highly niche, super-long range airplane.