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737 MAX: US airlines put Boeing under pressure

One month after the 737 MAX fleet was shut down following two closely related tragedies, Boeing is faced with a cascade of airline cancellations by American airlines and the interference of Donald Trump, who is seeking to rename this plane.

American Airlines and Southwest are now convinced that the immobilization of this aircraft, which went into service in May 2017, will disrupt their flight plans during the summer, a period of major shifts in terms of profitability.

The first will cancel all flights from 737 MAX until August 19, while the second – which has the largest fleet in the world of this model with 34 copies – will delete his until August 5.

United Airlines, which operates 737 MAX 9s, said it has used so far “iconoclastic solutions” to avoid canceling many flights but have no choice for the summer.

“Nobody knows when the FAA (the US Air Regulator) will review (the modified MAX), so we decided to cancel MAX flights from our program until early July,” an email spokesperson said.

In total, it is on average more than 275 flights per day that will be canceled, which should have an impact on the revenues and profitability of these companies and could encourage them to increase ticket prices, even if for American this represents only 1.5% of daily flights and 4% for Southwest.

American Airlines has already warned that the total revenue per available seat per miles traveled (TRASM), indicator of the highly monitored profitability in air transport, would increase in the best case by 1% instead of a rise of 2 % originally planned.

Southwest currently allows affected travelers to book a new flight at no additional charge.

“Neither Airbus nor Boeing likes cancellations because there are firm contracts,” says Leeham firm expert Scott Hamilton. “However, companies accept device exchanges if they are forced to get there,” he adds.

The entire world fleet of 737 MAX has been banned from flying since mid-March because of two accidents every few months: a Boeing 737 MAX of the Indonesian company Lion Air crashed in the Java Sea on October 29, making 189 dead, and the same copy of Ethiopian Airlines crashed on March 10, killing the 157 people on board.
The MCAS anti-stall system was involved in both cases.

– Remove the trust link –

“What do I know about marketing, maybe nothing (but I managed to become president!), But if I were Boeing, I would REPAIR the Boeing 737 MAX, I would add new great features , and I would give a NEW IMAGE to the plane with a new name,” tweeted Mr. Trump early Monday morning.

“Trump does not know what he’s talking about. Boeing is not going to rename the 737 MAX,” says Hamilton, noting that more than 4,600 copies of Boeing’s sales engine had already been ordered and announced flight cancellations would not have an important impact”.

This is also the opinion of Richard Aboulafia, an expert at Teal Group, who argues that it is “prudent to ignore any statement by President Trump on aviation.”

Boeing is finalizing the changes to the MCAS software, which it has promised to submit to regulators in the “next few weeks” to obtain a lift from the 737 MAX flight ban.

“We are focused on testing and implementing the software update and re-establishing the trust relationship with our customers, drivers and passengers,” a spokesman said Monday.

“We know we have a great responsibility to anyone who flies on our planes and we will make sure the MAX is one of the safest planes to ever fly,” he added.

Many experts rely for the most part on a flight authorization of the 737 MAX modified towards the end of August.

Meanwhile, the sector is trying to regain the trust of the general public.

For Boeing, which has already stopped deliveries of the 737 MAX and reduced production, a build-up of delays could put even more slate on airline compensation claims, warns Scott Hamilton.

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