Impact of MAX grounding emerges with earnings reports

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Introduction
April 29, 2019, © Leeham News: With first quarter financial results beginning to be reported, the impact of the grounding of the Boeing 737 MAX is beginning to emerge.

Boeing 737 MAXes stored at Everett Paine Field. Photo by Jennifer Schuld.

The first out was from Boeing itself, followed by a few of the airlines that operated the MAX before it was grounded March 13. Boeing reported the grounding cost it about $1bn, for just the two weeks the airplane has been on the ground. Norwegian Air Shuttle, which was using the MAX on new trans-Atlantic services, lost millions of dollars. American Airlines will take a $350m hit from the groundings. Southwest Airlines surprised many with a stronger-than-expected first quarter despite having 34 MAXes on the ground and a cost of $200m. Air Canada extended the removal of its MAX fleet from its schedules another month, to Aug. 1.
Summary
  • JP Morgan doesn’t predict deliveries resuming until the fourth quarter.
  • The investment bank sees 200 MAXes in inventory accumulating and cash losses of $1.5bn per month while the plane is grounded.
  • Wall Street hopes that 2020 will be a normalized year.
  • If simulator training is required by regulators before the MAX can return to service, JP Morgan estimates more than 4,400 pilots need to be trained.

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