Boeing to Pay Brazil’s Gol $412 Million For 737 MAX Groundings - Report
Brazil airline Gol Linhas Aereas Inteligentes (GOL) entered into an agreement with Boeing Co (BA) to get up to 2.4 billion reais ($412 million) from the planemaker as compensation for Read More... The post Boeing to Pay Brazil’s Gol $412 Million For 737 MAX Groundings - Report appeared first on TipRanks Financial Blog.
Brazil airline Gol Linhas Aereas Inteligentes (GOL) entered into an agreement with Boeing Co () to get up to 2.4 billion reais ($412 million) from the planemaker as compensation for the grounding of the 737 MAX plane, in a mix of cash and credits, Reuters reported.
Gol said that Boeing already paid close to 500 million reais in cash. In addition, the Brazilian airline expects to receive up to 1.9 billion reais in credits that can be used for new aircraft acquisitions, and to reduce interest and depreciation expenses.
The 737 MAX aircraft has not flown in more than a year after two deadly crashes forced regulators to scrutinize the safety of its design. Brazil’s largest airline is one of Boeing’s biggest customers and had ordered more than 100 Boeing 737 MAX planes. Those orders have already been reduced and Gol said it will not make new aircraft payments to Boeing for the next two years.
Commercial airline travel has fallen off a cliff due to coronavirus-induced lockdown restrictions forcing many airlines around the world to ground the majority of their fleets and suspend aircraft deliveries. Boeing reported this week that it did not receive a single order in April, while it was also grappling with 108 order cancelations for its grounded 737 MAX plane.
The April cancellations of its 737 MAX jets were from clients including China Development Bank Financial Leasing Co and General Electric’s () aircraft unit GECAS.
According to the agreement with Gol the compensation amount is the maximum and is subject to certain undisclosed conditions. Gol said it may receive less than that.
The planemaker’s stock dropped 3% to $121.50 in U.S. trading on Wednesday, taking its year-to-date plunge to more than 64%.
TipRanks data shows that overall Wall Street analysts are sidelined on Boeing shares. The Hold consensus is based on 11 Holds and 6 Buys and 1 Sell. The $163.18 average price target implies 34% upside potential in the stock in the next 12 months. (See Boeing’s stock analysis on TipRanks).
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