WASHINGTON—U.S. operators with Boeing 737 MAXs are shuffling aircraft assignments and canceling flights to address gaps created by having the grounded aircraft unavailable, and may have enough flexibility to keep the ramifications of a short-term grounding minimal.
Southwest Airlines is the carrier facing the largest challenge, as it has the most MAXs, 34, of any U.S., operator, and also the highest percentage of fleet exposure, at 4.5% of its 750-aircraft fleet. A Bernstein analysis shows that 6% of the airline’s scheduled block hours and 8% of its available seat miles over the next six months were to be generated by its MAXs.
The Dallas-based carrier is back-filling around 200 daily departures that its MAX flew prior to FAA’s Mar. 13 order banning the model’s operation indefinitely. The airline, which is adding MAXs for growth and to replace older 737-700s, has been canceling about 150 flights per day and shuffling the remainder of its 750-aircraft fleet to operate the rest. It is modifying its schedule daily, and attempting to give customers at least five days’ notice when flights are canceled. The airline’s recently-launched Hawaii operations are not directly affected by the grounding, as its designated extended range operations, or ETOPS, subfleet only contains 737-800s.
Dallas/Ft. Worth-based American Airlines operated 85 departures per day with its 24 MAX 8s. “Our operations center is working to reroute aircraft throughout the system to cover as much of our schedule as we can,” the carrier said. “Cancellations will vary as our team has rerouted aircraft throughout our network.”
United Airlines operated about 40 daily departures with its 12 MAX 9s. “Through a combination of spare aircraft and rebooking customers, we do not anticipate a significant operational impact,” the Chicago-based carrier said.
Public concern over the MAX groundings is affecting carriers that don’t operate the type. “We’ve received many inquiries about the 737-MAX 8 and 737-MAX 9 aircraft,” a note on the Alaska Airlines Fleet web page says. “Alaska Airlines does not currently have these aircraft in our fleet.” The page does not list Alaska’s outstanding order book, which includes 32 MAXs. The first one is slated to be delivered in June.
Regulators around the world banned 737 MAX operations in the days following the Mar. 10 crash of an Ethiopian Airlines 737 MAX 8 near Addis Ababa. The accident was the second fatal for the type in 19 weeks; 346 people were killed between the two crashes. An automatic system meant to help prevent stalls is being eyed in both investigations, and Boeing is working on a modification based on what was learned from the first accident, Lion Air Flight JT610, in October 2018. FAA will mandate the modification—a software change—and additional training as part of clearing the MAX to return to service, but the timing is not clear.
A short-term grounding of 6-8 weeks can be managed by stretching resources, JP Morgan analysts suggest. “We believe the vast majority of grounded capacity can be sourced from spares and increased daily utilization,” JP Morgan wrote in a Mar. 14 note. “A headache, to be sure, but hardly a migraine. Granted, MAX substitutes consume more fuel and maintenance, so some CASM pressure is inevitable, in our view, but not of a magnitude expected to disrupt current guidance.” Southwest’s exposure makes it an exception among U.S. airline, JP Morgan adds, though the carrier has not changed its financial guidance since the grounding.
If the grounding stretches on, even carriers with little exposure will feel the pain, Bernstein analysts said. “The ultimate impact of this grounding could grow into something more impactful the longer it lasts,” Bernstein wrote in a Mar. 18 research note. If the MAXs remain grounded into the peak summer season, the result “would be more consequential for financial performance,” it added.