MAX cuts stretching into peak Summer 2019 season

Even as Boeing suggests the testing for its updated 737 MAX software is progressing well its airline customers are scrubbing the type from their schedules. At the beginning of the month Air Canada announced its MAX fleet would not fly before July 1, 2019. Last week American Airlines removed the type through June 5, 2019. This week Southwest Airlines, owner of the largest MAX fleet, cleared the planes off its schedule through August 5, 2019, “to add further stability for Customers booking their summer travel.”

Southwest faced a growing backlash in recent weeks as it worked to maintain its operations without the MAX in service. Like other operators of the type the company was forced to cancel some flights on short notice because it lacked sufficient aircraft to run the full schedule. Unlike United Airlines and American Airlines, however, Southwest does not have the so-called “interline agreements” in place to accommodate passengers on other airlines. And with load factors hovering north of 85% finding seats on other Southwest flights proved a challenge. This left passengers rightfully upset as Spring Break plans fell apart.

The company cites an inability “to control their experience on another airline. It’s a philosophical approach to the customer experience.”

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Southwest’s lack of interline agreements is not new; the company has never offered that option in its history. But it also has never suffered a sustained fleet grounding like the 737 MAX now presents. Given the uncertainty of returning the plane to service the company is taking more aggressive measures to prevent such disruptions over the peak summer season.

While the timing for the return to service of the MAX remains unclear, what is very clear is our commitment to operate a reliable schedule and provide the famous Customer Service you expect from us.

-Southwest Airlines statement

The impact of the MAX grounding affect flights beyond just those scheduled to operate on the type. Airlines are shuffling their operating aircraft to minimize the number of passengers affected and to keep key routes flying. All booked passengers face a chance of their flights being affected, even if not originally scheduled to fly on the MAX.

In Asia the impact is similar. Singapore Airlines is delaying plans to transfer some 737-800 aircraft between its SilkAir and Scoot subsidiaries. Scoot was previously slated to take over a number of SilkAir routes later this year. The carrier is also canceling some flights and augmenting service to other destinations with its mainline wide body aircraft. European carrier TUI claimed a 200 million euro impact so far from the grounding and expects the fleet to be out of service until mid-July. Norwegian is also shuffling its schedules but has not indicated an expected date for the MAX to resume flying.

Delta Air Lines does not operate the MAX but it has picked up some passengers as a result of rebookings from other carriers. The company indicated in its quarterly earnings call this week that the number of seats occupied by those displaced MAX travelers was insignificant, suggesting that American and United are mostly able to manage the cancellations internally.

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Boeing Makes Progress

Dennis Muilenburg, @Boeing CEO, speaking at the George W. Bush Presidential Center leadership forum, says test pilots have completed 96 flights on the 737 MAX with the MCAS software fix, > 159 hours in the air, and will do additional test and production flights in coming weeks.

— Dominic Gates (@dominicgates) April 11, 2019

Testing of the updated MCAS software continues at an accelerated pace, but Boeing is also settling in for the grounding to last a while. The company slashed production of the 737 by 20%, to 42 per month from 52. That move came even as suppliers were ramping up to support an expected increase to 57 frames per month later this year. Instead those suppliers will need to trim output or store their product elsewhere while awaiting Boeing’s return to the higher pace of production.

Spirit AeroSystems, the manufacturer of fuselage sections, will not slow its production, at least not yet. Instead it will maintain the pace and continue to “deliver” the giant tubes to Boeing, but not ship them to Renton. Storage space for the finished components could prove a challenge if the slower production rate stretches too long. Other suppliers have been less public about their plans for production during this period.