US planemaker Boeing has seen firm orders on its upcoming 777X widebody aircraft fall by nearly 40 per cent to just 191 after introducing stricter accounting rules that better assess the viability of orders.
Boeing confirmed that under the new rules, 118 orders for the aircraft are no longer deemed firm.
It comes as the planemaker announced it would be required to spend an additional $6.5 billion on its 777X program, in part due to subdued demand for the model, as well as to accommodate additional safety inspections in light of the 737 MAX fiasco.
Said additional inspections have also resulted in Boeing pushing back the aircraft’s entry into service until late 2023.
“Delays on the 737 MAX and 777X programs have resulted in, and may continue to result in, customers having the right to terminate orders and or substitute orders for other Boeing aircraft,” Boeing said in a regulatory filing.
Customers for the 777X, a larger version of its 777 mini-jumbo, include Emirates, Qatar Airways, Etihad Airways, British Airways, Cathay Pacific Airways Ltd, Singapore Airlines Ltd, ANA Holdings Inc and Lufthansa.
At the end of 2019, Boeing had 309 of its 777X listed as firm orders, meaning the planemaker was confident those customers still planned to buy the planes and were able to finance their purchase.
Boeing chief financial officer Greg Smith said last week on an earnings call that the company’s order backlog had fallen during the fourth quarter of 2020 due to its accounting standard assessment, including the revised schedule for the 777X.
Meanwhile, chief executive Dave Calhoun said the manufacturer is also making “prudent design modifications” to the 777X, including hardware changes to the actuator control electronics, in response to current regulator expectations.
