Southwest has a close relationship with Boeing. It has flown 737 variants almost exclusively for its entire history. On a 2011 conference call, the company’s CEO was asked about what he thought about the recently announced 737 MAX.
Boeing, of course, just made a decision late summer to go forward with the 737 MAX and so we are just now being briefed on what it does, what it doesn't do, and it's just too early to give you an answer on either our evaluation of that or what we might do.
It wasn’t long before airlines started expressing their excitement for the model.
Two weeks ago we announced a narrow body aircraft order for 100 Boeing 737 Max 9 aircraft and 50 Boeing 737-900 ER aircraft. These planes offer a significant improvement in customer experience, fuel efficiency, environmental responsibility, and operating costs, compared to the aircraft they are replacing.
All indications are it will be a vastly superior aircraft from an economic perspective.
What I would tell you is that the next sort of big thing coming on the horizon is the 737 MAX. That's going to be an aircraft that is going to give us another 500-mile-plus range, much lower unit costs.
Praise wasn’t limited to airlines in the US. Panama’s Copa Airlines, for example, also only saw upsides to the plane.
The 737 MAX fleet will continue to position Copa Airlines as the leader in terms of service and efficiency in our region… So no matter what the demand environment is from 2018 and onwards, we will be better off, once we start getting the MAX aircraft.
Canadian carrier WestJet was excited about what the new plane would do for its service.
As our fleet, including our future deliveries of Boeing 737 MAX aircraft, continues to expand, we expect to establish additional profitable routes in Canada, the U.S. and internationally. Our evolving aircraft mix allows us to provide increased route frequency, increased non-stop routes and improved scheduling times and connectivity to our guests
The airline industry is obsessed about efficiency and unit economics. The 737 MAX was cheaper to operate by seemingly every measure—including “CASM,” the average cost of flying one seat one mile.
The MAX brings 13% to 14% better fuel economy, 15% longer range and 40% less noise. And that's all as compared with the previous generation 737.
As our schedule becomes more optimized and as we take on more MAX aircraft to begin the retirement cycle of the 700s, we expect the fuel efficiency profile of our fleet to continue to improve.
These aircraft will allow us to replace older and smaller-gauge aircraft domestically and support our capacity plan. The unit cost advantage of these more fuel-efficient and larger aircraft is expected to be in the double digits and support our CASM-ex initiatives for years to come.
By the end of 2018, 6 737 MAX 8 aircraft had already been incorporated into our fleet, providing us with lower operating expenses and expanding our network, allowing us to serve new destinations in South America, the Caribbean and the United States.
On March 10, 2019 Ethiopian Airlines Flight 302 crashed. Coming around five months after Lion Air Flight 610 crashed in similar circumstances, authorities around the world grounded the 737 MAX. Airline executives immediately expressed concerns for their bottom lines. Airplanes on the ground don’t make money.
Our ability to achieve better-than-flat CASM-ex this year will be negatively impacted if the MAX aircraft remain out of service
Our near-term forecast, though, has been affected by the 737 MAX grounding, which we currently estimate will negatively impact our 2019 pretax results by approximately $350 million, and that assumes that they are flying as we currently have them scheduled, again, by August 19.
As a result of the grounding, we canceled approximately 1,200 flights in the first quarter. In aggregate, we estimate that these grounded aircraft and associated flight cancellations negatively impacted first quarter pretax income by approximately $80 million, $50 million of that is attributed to the MAX.
Analysts began asking airlines what kind of compensation they would seek from Boeing for the disruption to their businesses.
Boeing has been a great partner of ours for decades. And if you use some historical references, such as the 787 situation a number of years ago, we'll have a conversation with Boeing and I expect like we always do to resolve whatever that conversation is in a way that works for both of us.
At the appropriate time, we'll talk about what this has done to American. Boeing is a very… is a good and longtime partner and we'll work through that privately. But nothing that we had any conversations at that point yet. At some time perhaps we will, but right now we're focused on working together to get the airplane back and recertified.
It became harder to sell high-priced, last-minute tickets because with a shortage of planes there were fewer seats available for sale.
Now keep in mind because of the MAX grounding, we'll have less close-in seat inventory just because we're having to reaccommodate impacted customers on new itineraries
Yet airline execs are still confident in the 737 MAX, even though they realize they’ll need to convince their passengers that the planes are safe.
It's a great airplane. Boeing is a great company. We're looking forward to obviously working with the FAA to get it ungrounded. And we'll gauge our messaging according to what questions our customers had, to a large degree.
An added complication is waning trust in the US Federal Aviation Administration. The aviation regulator was one of the last to ground the plane following the Ethiopian crash, and later faced criticism for the way in which it certified the 737 MAX.
If the FAA recertifies the MAX, we absolutely will fly the airplane. That's our regulator.
Without question, these planes will not reenter service until the FAA lifts the grounding of the MAXs and we are 100% certain that these aircraft are safe to put back in service.
I think the other benefit that we've seen in the U.S. over the last couple of decades is just how, notwithstanding the awful incidents related to the 737 MAX, the industry in the U.S. has made significant safety enhances and really has one of the most advanced regulatory safety frameworks in the world. And the industry and everyone has benefited from that. And so I'm very optimistic that, that approach, combined with our continued close relationship with Airbus and Embraer, continues to promote safety as our #1 value here at JetBlue.
In a worrying sign for Boeing, Air France-KLM made sure to note that it had no plans to order any 737 MAX planes.
We are not ordering for the time being any 737 MAX. It is just a matter of fact. And of course, we are now all looking extremely carefully to the development and the announcement made by Boeing and all the bodies which are involved in the management to these events, and we will see later what to do.
Air Canada, which has 20 of the planes, said it could manage the 737 MAX grounding just fine.
Your airline can be sustainably profitable regardless of fuel price volatility, economic uncertainty, trade wars, aggressive competition or even a Black Swan event, such as we are managing today with the grounding of the Boeing 737 MAX - an overnight grounding of over 20% of our mainline narrow-body fleet.
It was a textbook display of the type of nimble response I have, over the decade, insisted Air Canada must become capable of if it is to thrive.
Though, apparently, no amount of teamwork and creative scheduling could keep the airline completely out of trouble.
Filling in that 36 aircraft required many changes, of which everything from extending leases for aircraft that were actually going to be returned, that the MAX we're going to replace, so extend the leases on A320s, on E190s that we're exiting. We canceled a lot of WiFi projects, paint projects on airplanes so we're getting ready for the summer peak, all to put them all back into service. And then, of course, with all of that, that yet really wasn't quite enough.
Copa, which once said the 737 MAX could do no wrong, now blames it for its financial woes.
We're having to schedule delays, in some cases, long delays. We're changing schedules so we can rotate aircraft in a more effective way. And we're also reaccommodating passengers… we can assume that we would have been raising our guidance if it was not for the MAX grounding.
Its CEO still has hope, though.
The MAX is going to be a great aircraft medium- to longer-term. It had very serious issues, obviously. Nothing more serious than an accident or 2 accidents to be more precise. But we know it's going to be fixed and we have full confidence on the aircraft. But in the meantime we're dealing with a tough situation.
There’s also the issue of what to do about airlines’ open orders for 737 MAX planes.
We have 34 of the MAX currently on order… three are scheduled to come this year. We placed that order back in October 2012 and we have no plans to cancel that order at this time.
We're eminently confident that Boeing will resolve the issues associated with the MAX today and produce an aircraft longer term that is consistent with the history of Boeing, the 737 being one of the most successful aircraft in narrow-body history. So as it relates to that, we don't have as much concern. I think there are issues with timing.
There are also knock-on effects. When new planes don’t replace old planes, the airlines expecting hand-me-downs have to adjust.
Due to the grounding of the Boeing 737 MAX 8 fleet, SilkAir will no longer transfer the Boeing 737-800NG aircraft to Scoot in FY2019/20. As a result, Scoot will be suspending services to four destinations with weak demand – Lucknow, Kalibo, Quanzhou and Male.
Even still, airline bosses are convinced of the need for the 737 MAX in their fleets—whenever it’s allowed to fly again.
It's now clear they won't be delivered, we've taken them off sale for the remainder of our entire summer schedule out to the end of October...We won't take deliveries of the aircraft until I think October or November of this year, but we expect them to be operating successfully in the winter schedule. We continue to have the utmost confidence in these aircraft, which have 4% more seats and 6 -- or 16% more fuel efficient and will generate significantly lower noise emissions.