Grounded Boeing 737Max Turning Out To Be A Major Disruptor For Airline Industry

There is no word yet about when the grounded 737 Max jet planes of Boeing would again be allowed to fly in the air by regulators. The planes got grounded all across the world after two fatal crashes involving the planes happened within five months to each other – the first in Indonesia in October 20918 and the second in another in March 2019 in Ethiopia. The two crashes killed all the 346 people who were on board.

The grounding has resulted in the cancellation of thousands of flights during peak travel periods by those airlines that had significant number of the 737 Max-es in their fleets. Analysts and airlines expect more cancellation in the months ahead as there is no guarantee about when the planes would be allowed to fly again.

The 737 Max has been Boeing’s one of the most successful models and is especially liked by airlines because of its high fuel efficiency, despite it being in service for a little over two years. It is an improved version of its single-aisle predecessor that has been in the air since the 1960s.

The plans were grounded after primary investigation into the two crashes hinted at faulty functioning of a automated flight-control software in both crashes. And despite Boeing claiming to have developed a solution of the issue, it is yet to be presented to the regulators and hence the crisis lingers on.

The company informed investors of a hit to its earnings to the tune of $5.6 billion before tax after United States regulators found another flaw in the planes. In the second quarter of the current year, Boeing took a part of that charge at $4.9 billion after-tax which will account for compensation that the company wants to pay to the relatives of the victims of the two crashes.

While saying that it assumed that the 737 Max planes would be back in the air at the beginning of the fourth quarter, Boeing could not confirm “actual timing of return to service” and said that it “could differ from this estimate.”

All of these developments have forced airlines all across the world to review their growth and schedules as the absence of the 737 Max planes threat to be more disruptive than thought earlier.

The 737 Max was removed from schedule till early November by Southwest Airlines of the US – which currently has 34 of the planes in its fleet that has a total of about 750 Boeing 737 crafts. Similar rescheduling was and consequent cancellations of flights were dome earlier for the fourth time this since the grounding by US airlines American and United.

The lower number flights across the world because of the absence of the 737 Max planes is pinching the customers as they are being forced to shell out more than usual for seats because coupled with the rescheduling, there is also increased demand or seats.

“Launching of new international destinations is obviously going to be on hold,” if the grounding lasts past October, said low-cost Brazilian carrier Gol Linhas Aereas Inteligentes’s CFO RichardLark. “That’s pushed into next year.” The airline is using the less fuel-efficient 737 planes to fly existing routes between Fortaleza and Orlando, Fla. and Brasilia and Miami but because the planes aren’t as efficient they require a fueling stop in the Dominican Republic, “which makes it a less attractive flight,” said Lark.

(Adapted from CNBC.com)

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