SOURCE / INDUSTRIES
Factbox: Airlines count costs of Boeing 737 MAX grounding
Financial projections in turmoil as uncertainty continues for aircraft supplier
Published: Jul 18, 2019 04:33 PM

An American Airlines 737 MAX sits at LaGuardia airport in New York on March 13 Photo: VCG



Some international airlines have reported tentative schedules for when they expect their Boeing 737 MAX airplanes to be up in the air again. More than 300 Boeing 737 MAX 8 and MAX 9 passenger planes were taken out of service after two fatal crashes in Indonesia and Ethiopia, within 5 months of each other, killed 346 people.

The aircraft was grounded in March after the crashes, and Boeing is working on a software fix that it reportedly hopes to present to regulators in September.

The following are airlines that have warned about the potential cost and end-date of the grounding:

TUI Airways 

TUI Airways expects its 2019 underlying earnings before interest, tax and amortization (EBITA) to fall by 17 percent, having previously expected the figure to be in line with the 1.18 billion euros ($1.32 billion) generated in 2018.

It added that EBITA could even fall as much as 26 percent in 2019 if the planes remained grounded beyond the middle of July

Ryanair

Ryanair said on Tuesday that it was expecting the 737 MAX to return to service before the end of the year, with the first of the new planes it has ordered to be delivered in January and February of 2020.

Europe's largest budget airline has cut its growth forecasts for next summer, now expecting to carry 3 percent more passengers, down from its previous 7 percent forecast. 

It blamed possible further delays in deliveries of Boeing 737 MAX planes for the revisions. 

Ryanair said it would close routes and bases in November to adjust for the lower growth.

Ryanair is one of Boeing's biggest customers and was due to have 58, 737 MAX planes delivered in time for its 2020 summer season. On Tuesday, it said it now expected to have received only 30 by that time.

Ryanair Chief Executive Michael O'Leary said it was hard to predict what would happen, but that the airline was assuming the MAX might not return to service until as late as December, pushing its first deliveries of the jet back to January or February.

As Ryanair can only process 6-8 new planes per month and does not take deliveries during its peak June-August months, the company is making plans on the basis of having 30 MAX planes available for the summer, O'Leary said in a statement.

"This number could rise or fall further, depending on when the B737 MAX actually returns to flight services," he said.

As a result, Ryanair expects to fly 157 million passengers per year until March 2021, cutting its growth plans from 10 million additional passengers to 5 million, he said.

"While it is disappointing that we have delays and disappointing that the growth for next year will be slower than ... we had originally planned, we remain confident in the aircraft. We still think it is a great product," O'Leary told investors during a conference call.

"As soon as we can reasonably organize these deliveries with Boeing, we would intend to take all of the 135 firm aircraft we have ordered over the next five years," he said. He did not mention the additional 75 options Ryanair has for MAX planes.

Norwegian Air Shuttle

Norwegian Air Shuttle stated in its second-quarter release that it expected its Boeing 737 MAX aircraft to return to service in October. 

The grounding reduced the second quarter profit by around 400 million Norwegian crowns ($46.8 million), the airline said.

United Airlines 

United Airlines said its fleet of Boeing 737 MAX aircraft would stay out of its flight schedule until November 3, after Boeing said last month that it would take until September at the earliest to fix new flaws in the grounded planes discovered by the Federal Aviation Administration.

United Airlines Holdings Inc on Tuesday reported a greater-than-expected increase in second-quarter profit, driven by strong air travel demand and the ability to charge more for seats given supply constraints from the Boeing Co 737 MAX grounding.

Chicago-based United said that adjusted earnings per share rose to $4.21 in the second quarter, which ended June 30, from $3.23 a year earlier. 

Analysts on average had forecast $4.08 per share, according to IBES data from Refinitiv.

American Airlines

American Airlines said on Sunday it was extending cancellations of around 115 daily flights until November 2 due to the continued grounding of Boeing 737 MAX planes.

The airline's decision was expected after the Federal Aviation Administration, which must reapprove the jets for flight following the two fatal crashes, last month uncovered a new flaw that Boeing estimates will take until at least September to fix.

"American Airlines remains confident that impending software updates to the Boeing 737 MAX, along with new training elements Boeing is developing in coordination with our union partners, will lead to recertification of the aircraft this year," the airline said in a statement on Sunday.

American, the world's largest airline and the second largest MAX operator in the US, had most recently planned to keep the MAX, which it used for most flights between New York's LaGuardia airport and Miami, off its schedule through to September 3. 

It has been substituting other aircraft for its busiest flights, while canceling others and temporarily suspending direct flights between Oakland, California, and Dallas/Fort Worth. Some analysts have said they do not expect the MAX jets to fly again before the end of the year. The airline cut its annual profit forecast in April, citing an estimated $350 million hit from the MAX groundings.

Southwest Airlines 

Southwest Airlines said on July 1 that it expected to keep its Boeing 737 MAX jets off its flying schedule beyond the current October 1 re-entry date.

On March 27, the largest global operator of the MAX planes cut its 2019 financial outlook after being forced to pull its new fleet of 34 Boeing 737 MAX planes out of service.

Turkish Airlines 

Turkish Airlines said on June 25 that its Boeing 737 MAX planes would be grounded until further notice, resulting in several flight cancellations throughout the summer.

Air Canada 

Air Canada suspended its 2019 financial forecasts on March 15, saying it was adapting a contingency plan to address the uncertainty surrounding the planes.

In May, the airline reported a surprise first-quarter profit despite the grounding of Boeing's 737 MAX jets. It will report second-quarter results on July 31.

WestJet 

On March 18, the Canadian carrier WestJet suspended its 2019 financial projections following the groundings.

In May, the airline said it expected its 13 MAX planes to return to service in the third quarter.