Flying Boeing's 737 MAX: FAQs
Without addressing the more complex and controversial aspects surrounding the aircraft, this short CAPA summary attempts to address at least some of the questions being more commonly asked, in 737 MAX FAQs.
What is the current situation with the 737 MAX?
All 737 MAX aircraft are grounded globally.
There were 384 aircraft either in service or delivered to 47 airlines at the time of the grounding, in Mar-2019. In addition to that, approximately 175 more 737 MAX aircraft have been produced since the grounding and have been stored at Boeing’s production facilities. The aircraft will remain grounded until regulators deem the aircraft airworthy.
Why was the 737 MAX grounded?
International aviation regulators progressively ordered suspension of operations of the 737 MAX between 11/13-Mar-2019. The decision was based on data from the crash of Ethiopian Airlines Flight 302 on 10-Mar-2019. This accident followed the crash of Lion Air Flight 610 on 29-Oct-2018.
The aircraft was grounded after regulators viewed flight data recorder information indicating the Ethiopian Airlines aircraft had an erroneous angle of attack sensor input that activated the Manoeuvring Characteristics Augmentation System (MCAS) function during the flight, as it had during the Lion Air 610 flight.
What is the problem?
There is no simple answer - nor any simple solution. Preliminary accident investigations have linked the accident to erroneous angle of attack sensor input that activated the Manoeuvring Characteristics Augmentation System (MCAS) function of the aircraft.
MCAS is a part of the flight control system introduced with the 737 MAX. It was intended to help minimise the handling differences between the 737 NG and the 737 MAX and improve aircraft handling characteristics and decrease pitch-up tendency at elevated angles of attack.
What is Boeing doing to return the aircraft to service?
Boeing has developed and is planning to release a software update to MCAS and an associated comprehensive pilot training and supplementary education program for the 737 MAX. Boeing is now conducting simulator and flight tests of the solutions.
What are national regulators doing?
The US FAA is participating with Indonesian and Ethiopian investigations into the Lion Air and Ethiopian Airlines crashes. The FAA has also ordered Boeing to develop an MCAS software update to provide additional layers of protection for the aircraft. Boeing has also been tasked with developing improved training regimes for Boeing 737 pilots.
The 737 MAX MCAS software improvements and changes to pilot training have yet to be certified by the US FAA. During the certification process, the FAA identified an additional requirement during simulator sessions reviewing specific flight conditions and scenarios, which Boeing intends to address through updated software changes.
The US FAA has formed a Boeing 737 MAX Joint Authorities Technical Review (JATR), to conduct a comprehensive review of the certification of the aircraft’s automated flight control system. Nine other aviation regulators from Australia, Brazil, Canada, China, the EU, Japan, Indonesia, Singapore and the UAE are participating in the JATR.
The US FAA has also held an international summit with 33 national aviation regulatory bodies worldwide to determine the steps necessary to return the aircraft to service.
Airline industry representative body IATA has held two international meetings to discuss the safe re-entry into service of the Boeing 737 MAX aircraft. IATA has urged regulators to ensure they align with each other on technical validation requirements and timelines for this. IATA has also reiterated the need for alignment on additional training requirements for Boeing 737 MAX flight crew.
The 737 MAX case has undoubtedly reduced the level of deference non-US regulators previously showed to the FAA (and Boeing), not just because the fault occurred in the first place, but also because of the US’ reluctance to ground the aircraft following the second crash. The fact that President Trump personally intervened to order the US grounding also did no favours to the system.
In view of the strenuous efforts being made to ensure alignment between regulators, it is probably unlikely that the FAA would in any event pre-emptively deliver full clearance until at least all the key administrations accepted the terms.
For international airline operations, it is not just necessary for the national registry of the aircraft to clear the aircraft. Any country into whose airspace the aircraft will fly also needs to be aligned.
Will it/has it become a political football?
In light of the US initiated trade dispute with China this has to be a possibility, particularly as China was first to ground the 737 MAX. From a commercial position, delay might however inconvenience national airlines who have grounded their existing aircraft and have orders for more. Where political goals meet commercial priorities, politics tends to win.
At airline level, some airlines have taken the opportunity to delay deliveries or cancel (tentative) orders. Several are reportedly in negotiation, usually as part of the compensation discussions. The delays do raise the issue of airlines potentially using the failure to deliver on time in order to push back or cancel altogether, but this will mostly depend on the details of the specific sales/purchase agreements.
What is the air travel industry doing to compensate for the capacity shortages?
All airlines operating the 737 MAX have grounded their aircraft, and have stopped taking delivery of new aircraft. Many airlines have sought additional capacity to cover shortfalls, either through leasing alternative aircraft, extending the operating lives of older aircraft or returning stored aircraft to service. The lease costs of late model 737s have escalated.
Which airlines are most affected?
According to the CAPA Fleet Database, the following carriers were the largest 737 MAX operators prior to the grounding:
- Southwest Airlines: 31;
- Air Canada: 24;
- American Airlines: 24
- Norwegian: 18;
- Air China: 16;
- China Southern Airlines: 16;
- TUI group: 15;
- China Eastern Airlines: 14;
- flydubai: 14;
- Lion Air: 14;
- United Airlines: 14;
- WestJet: 13;
- Turkish Airlines: 12.
In addition, the following lessors had 737 MAX aircraft in their fleets:
How long will the aircraft remain grounded?
Boeing assumes that regulatory approval of the 737 MAX return to service in the US and other jurisdictions will commence in “early 4Q2019”. This assumption reflects the company's best estimate, but actual timing of return to service could differ from this.
Several 737 MAX operators have extended suspensions of the aircraft from their published schedules. These cancellations extend to:
- WestJet: 29-Aug-2019
- Icelandair: 31-Oct-2019
- Southwest Airlines: “early” Nov-2019
- American Airlines: 02-Nov-2019
- United Airlines: 03-Nov-2019
What is the financial impact on Boeing?
Boeing has slowed 737 MAX production from 57 to 42 per month and is storing aircraft that it has produced. Boeing delivered 24 737 family aircraft in 2Q2019, compared to 89 aircraft in 1Q2019 and 137 2Q2018. Boeing’s 2020 outlook assumes a gradual increase in the 737 production rate from 42 back to 57 per month.
Boeing has also announced a USD100 million fund to address family and community needs of those affected by the accidents of Lion Air Flight 610 and Ethiopian Airlines Flight 302. Of this, USD50 million will be used to provide near-term financial assistance to families of the victims. There will undoubtedly be civil claims very substantially above this amount.
Boeing will take an after-tax charge of a USD4.9 billion impact to earnings for 2Q2019 (USD8.74 per share), in connection with an estimate of potential concessions and other considerations to customers for disruptions related to the 737 MAX grounding and associated delivery delays. This charge will result in a USD5.6 billion reduction in revenue and pre-tax earnings in 2Q2019.
In addition, Boeing’s estimated accounting costs to produce 737 family aircraft increased by USD1.7 billion in 2Q2019, primarily due to higher costs associated with a longer than expected reduction in the production rate. The increased 737 programme costs will reduce the margin of the 737 programme in 2Q2019 and future quarters.
Boeing’s share price reached an all-time peak at USD440 in late Feb-2019; as of 17-Jul-2019 it registered USD370. In comparison, at the end of Feb-2019 the Dow Jones Index was at 26,000; it reached an all-time peak of 27,360 on 15-Jul.
There will be an element of boysy macho thinking that says keep the name. There will be (divided) marketing opinions that say it should change. President Trump was in do doubt. But it is unlikely to be renamed the 737neo.
Will some travellers refuse to fly the aircraft when it flies again?
Definitely yes. How many and for how long will depend partly on whether it is renamed.
Travellers have very short memories in such cases and, accompanied by the right marketing campaigns, just small price discounts and convenience have a very significant impact on passenger decision making.
Understandably, for much more profound reasons, Ethiopian Airlines will be very slow to put the aircraft back in the air.