Sept. 9, 2019, © Leeham News: Reports increased last week that Europe’s EASA safety regulator may go its own way in recertifying the Boeing 737 MAX.
The head of IATA, the international trade group, and CEOs of several airlines and one lessor expressed fear and concern EASA won’t act with the Federal Aviation Administration to lift grounding orders of the MAX.
At the Regional Airline Assn. annual conference last week, buzz among journalists focused on one unverified report, based on EASA’s doubts reported during the week yet to hit the media, could significantly extend the grounding—measured in months, not weeks.
I know efforts are being made to verify the information.
If true, the effects would be devastating.
Boeing, airline and lessor customers, suppliers and, yes, shareholders, are counting on the FAA lifting its grounding order as soon as next month.
From a technical basis, this could happen. But if the FAA acts alone, this will hardly remove the global doubts over the safety of the airplane and lawyers will have a field day over why the FAA thinks the airplane is safe but other regulators do not—especially if there is another accident, regardless of the cause.
The airplane could be parked and smacked by an errant ground truck and irresponsible media and attorneys would find some way to blame the plane and its safety.
FAA-only approved recertification will be an operational nightmare for some carriers and may not help lessors at all.
The MAX would have to fly within the US states and territories. They couldn’t enter non-US airspace—not even trans-border to Canada or Mexico, let alone potentially trans-Atlantic service.
Lessors, whose customers are mostly non-US airlines, could not deliver these airplanes to these airlines.
US airline employees will have a hard time explaining to passengers who ask why the airlines here are flying the MAX when airlines elsewhere cannot.
If the grounding is extended, either partially outside the US or globally if the FAA doesn’t act alone, and an extension is measured in months rather than weeks, the impacts will be devastating.
Boeing in my estimation won’t want to continue to build inventory by producing and storing 737s are the rate of 42/mo—or, perhaps, any rate at all. The cash bleeding must stop.
Suspending production, as Boeing warned is a worst-case scenario, would mean about 10,000 layoffs at Boeing (this number may be high). The disruption of stopping production and restarting (whenever) would be immense.
Layoffs at suppliers, here in Washington State and across the county, would ripple and likely go into waves. Smaller suppliers may even go under.
When will we know what EASA will do?
Not until just before the FAA is ready to act, if the information shared on the RAA sidelines proves true.
The next few weeks may prove critical for the entire aerospace industry.
Fifty-three percent of our readers taking our poll last week think Boeing should drop the MAX name and market the 737 by its numeric designations: 737-7, 737-8, 737-9 and 737-10.
Only 20% think the MAX name is OK.
It would be a huge blow to Boeing’s corporate ego to do this.
But business is business. The MAX name appears to be toast.