American Airlines Group Inc. (NASDAQ: AAL) on Sunday announced that its fleet of 24 737 MAX 8 aircraft would remain grounded through August 19. Boeing Co. (NYSE: BA) jets have been grounded in the United States since March 13, following a crash on March 10 of an Ethiopian Airlines 737 MAX 8 just six minutes after takeoff from Addis Ababa.
That crash killed all 157 people on board the flight and came just four months after another 737 MAX 8 crashed in Indonesia, killing 189 people. Investigations into the cause of the two crashes have focused on an automated anti-stall system that the planes’ pilots were unable to override manually. The automated system forces the plane’s nose down when it receives data that the aircraft’s nose is rising too much and threatening to put the plane in a stall.
American’s CEO, Doug Parker, and president, Robert Isom, said in Sunday’s statement that the grounding was put in place so that the airline “can plan more reliably for the peak travel season and provide confidence to our customers and team members when it comes to their travel plans.”
The airline’s 24 aircraft affected by the grounding account for about 115 of American’s daily flight schedule, or about 1.5% of all the airline’s daily flights. American noted that it will have substitute aircraft available for some flights previously set to use the 737 MAX 8 and that it “remains confident” that the aircraft will be recertified “soon.”
Boeing is developing a software fix for the anti-stall system and until that fix is submitted for certification and approved by civil aviation authorities, the 737 MAX 8 and MAX 9 will remain on the ground. Boeing has delivered a total of 387 of the planes worldwide and has another 4,625 firm orders for future delivery.
Boeing’s 737 MAX family is the company’s bread-and-butter plane. There are four members of Boeing’s 737 MAX family with maximum seating ranging from 172 to 230. (Some airline seats may actually get tinier.) All are powered by a LEAP-1B engine from CFM International, a joint venture of General Electric and French engine-maker Safran.
According to Boeing’s price list, the 737 MAX 7 (737-7) has a list price of $99.7 million, will carry a maximum of 172 passengers (standard two-class capacity of 138 to 153) and has a flight range of 3,850 nautical miles (nm). This version of the 737 MAX remains in development.
The 737-8 is the most popular model of the MAX family and has a list price of $121.6 million, with a maximum seating capacity of 210 (standard two-class capacity of 162 to 178) and a flight range of 3,550 nm.
The 737 MAX 9 (737-9) carries a list price of $128.9 million and has a maximum seating capacity of 220 (standard two-class capacity of 178 to 193) and a range of 3,550 nm. United Airlines flew the first 737-9 commercial flight from Houston to Orlando last June.
The 737 MAX 10 (737-10) is the largest of this family and has a list price of $134.9 million. The plane seats a maximum of 230 passengers (standard two-class capacity of 188 to 204) for flights of distances up 3,300 nm. The first 737-10 is on-track for delivery in 2020.
Boeing also offers a 737 MAX 200 (737-8-200) aircraft at a list price of $124.8 million. This version is a 737-8 modified to seat 210 passengers for Europe’s Ryanair, which has ordered 135 of the planes.
Production of the 737 (both the MAX and the remaining earlier version orders) was cut from 52 a month to 42. Boeing cannot deliver the planes to customers and is parking them on the tarmac at its facilities near Everett, Washington, and at its storage facility in the Mojave Desert.
Aircraft buyers typically pay for new planes in roughly three equal payments: one when the firm order is placed, another when the plane reaches the beginning of the assembly line and a final payment on delivery. Last month, The Seattle Times cited Canaccord Genuity analyst Ken Herbert, who estimated the cost of fixing the 737 MAX’s problem at $500 million and the lost cash flow at $1 billion a month. There is even another $1 billion monthly at risk, said Herbert, “depending on how much of the airline operating revenues Boeing ultimately reimburses.”
Other major customers for the planes include Southwest Airlines, which has ordered 280 737-8s, and GE’s aircraft leasing business has ordered 176 as of March 2019. Flydubai has ordered 251 of the planes. More than 40 airlines worldwide fly the 737-8.
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