Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Costs pile up for airlines as Boeing 737 Max grounding enters eighth month

Costs pile up for airlines as Boeing 737 Max grounding enters eighth month

Airlines continue to delay when they plan to have the planes back again with no sign from regulators on when the planes will be approved again.
Costs are piling up for airlines as the 737 Max heads into its eighth month.

The planes have been grounded since mid-March after two crashes killed 346 people.

Boeing’s board stripped CEO Dennis Muilenburg of his chairman role so he can focus on getting the planes back.

The worldwide grounding of the Boeing 737 Max, now in its eighth month, is driving up costs for airlines as they cancel thousands more flights into 2020.

American and United this week joined Southwest in removing the planes, grounded since mid-March after two fatal crashes killed 346 people, from their schedules until January.

Boeing executives have said they expect aviation regulators to clear its best-selling plane to fly again in the fourth quarter, but the Federal Aviation Administration said it has no firm timeline for lifting the grounding.

That has forced airlines to repeatedly push back when they expect the planes to return to their fleets. The resulting lost revenue is denting airline profits and dashing their growth plans. The capacity constraints are also becoming a bigger headache for travelers, which in addition to facing canceled flights, are getting bumped more frequently.

The impact is becoming more pronounced as the grounding continues longer than expected. Airlines not only lack access to the more than 370 Max jets that were in fleets worldwide at the time of the grounding but also the hundreds more they expected Boeing to deliver this year. The fuel-efficient planes are a key part of these airlines’ growth strategies.

American Airlines on Wednesday said it canceled 9,475 flights in the third quarter because of the grounding order, which hit its pre-tax income by about $140 million. It expects to cancel 140 flights a day until it expects the planes to return, which would mean more than 14,000 cancellations in the fourth quarter and early January.

American reports earnings on Oct. 24. The airline had 24 of the 737 Max jets in its fleet at the time of the grounding and has 76 more on order.

Airlines are canceling flights ahead of time to avoid having to give complementary last-minute, alternative flights, trips that fetch a premium.

“That’s a close-in fare that another passenger is not paying,” said Credit Suisse airline analyst Jose Caiado. “I think they explicitly want to avoid doing that around Christmas and New Year’s.”

Airlines are trying to use similar or larger aircraft to rebook travelers and limit disruptions.

Even if regulators deem the planes airworthy again, airlines need at least a month to train pilots and perform maintenance work on the planes before passengers can fly them.

Boeing took a $4.9 billion after-tax charge in the second quarter to cover compensation to airlines affected by the grounding. It has developed software fixes for the 737 Max after crash investigators implicated an anti-stall system that misfired, repeatedly pushing the nose of the planes down in both disasters ⁠- a Lion Air flight in October 2018 and an Ethiopian Airlines 737 Max in March ⁠— but it hasn’t yet handed it over to regulators for review.

American’s CEO Doug Parker said the carrier has had conversations with Boeing but doesn’t have a firm number compensation figure yet.

“It’s hard until we know when the airplane is really going to be back in service to ascertain what the damages are,” he said in an interview.

On Friday, Boeing said its board stripped CEO Dennis Muilenburg of his chairman role so he can focus on getting the Max back to service.

The rising costs don’t only apply to airlines with Max planes in their fleets. Delta Air Lines doesn’t have any Maxes and it won market share from airlines hamstrung by the grounding. In “the second quarter as well as the third quarter, we certainly were a beneficiary of the MAX not operating,′ CEO Ed Bastian said on an earnings call Thursday. That, along with higher travel demand in general spurred more flying, driving up its non-fuel costs, mainly in employee wages. The airline said it plans to hire 12,000 workers, including more pilots and flight attendants, through the end of next year.

When the Max returns, it may not be all good news for U.S. carriers, whose stock is already underperforming the broader market.

That added capacity could drive down fares, said Credit Suisse’s Caiado.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
European Banks Push for Lower Cross-Border Barriers
Poland's Offshore Wind Sector Attracts Investors
Budapest Central European Fashion Week Kicks Off
U.S. Celebrates Labor Day
Hungarian National Team Captain Scores Epic Goal
×