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The Grounding of Boeing’s MAX Costs American Millions
The grounding of the Boeing 737 MAX by the Federal Aviation Administration will come at an estimated cost of $350 million to American Airlines, as reported by the airline during an updated profit forecast for the year. The airline has canceled flights through August while waiting for Boeing to release a fix to allow the aircraft to start flying again. So far, American has canceled over 15,000 flights since the grounding of the MAX following the crash of Ethiopian flight 302.
Rising oil prices have also increased the airline’s projected fuel expense by $650 million from previous estimates, further contributing to a decrease in expected profits. Before the grounding of the MAX, the American’s first quarter net profits rose by nearly $25 million.
The FAA believes that the grounding of the 737 MAX may be soon over as the aircraft could be cleared to fly in the next month as Boeing has been developing a software fix to counter the issues that pilots have encountered since the crash of Lion Air flight 610 last October. In addition to the updated software, Boeing will be giving additional training to the aircraft’s pilots. Even if the aircraft is approved by the FAA in the next months, the additional training and updates to the aircraft will keep them on the ground until August at the earliest.
American has not been the only airline affected by the grounding. With the aircraft grounded worldwide, some carriers are left to arrange other means to cover their schedule. While many airlines have resorted to canceling flights, some have resorted to wet-leasing aircraft in order to cover their schedules. Cayman Airways has occasionally wet-leased a Boeing 767 from Eastern Airlines to cover its Grand Cayman to Denver route, originally launched with the Boeing 737 MAX, and Air Canada is reportedly turning to Qatar Airways for aircraft to wet-lease.
For American Airlines, the grounding of the MAX aircraft has come at a great financial cost and some disruption to the schedule. However, the return of the MAX to service may not be the end of the airline’s problems. History has shown that a series of accidents can tarnish the public reputation of an aircraft. Although the MAX may be back in service soon, only time will tell if the public will trust the aircraft again.
The airline hopes to have the aircraft flying again by August.
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