GE Scraps $6.9 Billion Order for Ailing 737 Max in Hit to Boeing

General Electric Co.’s aircraft-leasing division scrapped orders for the 737 Max worth at least $6.9 billion based on list prices, dealing another blow to Boeing Co. as it grapples with a plunge in jetliner demand because of the coronavirus pandemic.

The cancellation of 69 undelivered jets stems from an agreement with Boeing to “rebalance” the order book, GE Capital Aviation Services said in a statement Friday. Gecas already has 29 Max planes in its fleet and will maintain orders for 82 more of Boeing’s best-selling plane, which has been grounded for more than a year after two deadly crashes.

The decision by one of the Max’s biggest customers deepens the pain for Boeing, which lost 150 orders for the beleaguered jet last month. Boeing and GE, which makes Max engines through a joint venture, have announced cost cuts and curtailed operations as the virus outbreak has upended economies and nearly eliminated demand for commercial air travel.

The Gecas cancellation “helps to balance supply and demand with market realities, especially in the leasing channel,” Boeing said in a separate statement. “Additionally, since last year, where it has made sense, we have adjusted our production skyline to the fact that we are building fewer Max airplanes than planned.”

Airlines and lessors are trimming orders to match the slow travel growth that’s expected to linger for years after the pandemic, sapping demand for new jetliners. Boeing and European rival Airbus SE are resetting production rates and delivery schedules to align with the market contractions.

That still might not result in mass cancellations. “Most delivery discussions will be done in broad contract negotiations” that include considerations such as other aircraft commitments, the timing of payments and the impact of delays, Bernstein analyst Douglas Harned wrote in a note to clients before the Gecas announcement.

Gecas didn’t specify the models of the Max, which range in list price from $99.7 million to $134.9 million. That means the canceled order is worth at least $6.9 billion before typical customer discounts.

Boeing surged 12% to $150.95 at 12:16 p.m. in New York, notching the biggest gain on the Dow Jones Industrial Average after announcing late Thursday that the company would reopen its Seattle-area factories next week. GE, which also supplies the planemaker with jet engines, jumped 5.4% to $6.58.