Wednesday 18 November 2020 3:25 pm

Boeing 737 Max cleared to fly again but industry warns of demand dearth

Boeing has today won approval from US regulators to begin flying its 737 Max again after the aircraft was grounded due to two fatal crashes.

But industry figures warned that the engineer would struggle to ramp up production of the model for several years due to the coronavirus pandemic.

Read more: Boeing to slash 7,000 more jobs after fourth straight quarter of losses

It has been nearly two years since the model was banned from flying after 346 people were killed in accidents in Indonesia and Ethiopia.

The 20-month grounding is the longest in commercial aviation history and has thrust the aerospace giant into the worst crisis in its history.

In total, it is estimated that the grounding of the 737 Max has cost Boeing $20bn, and losses have been compounded by the chaos caused by this year’s pandemic.

Airlines around the world have deferred or cancelled deliveries of the engineer’s planes due to a near complete collapse in demand for air travel.

It is into this environment that the 737 Max will be relaunched, with most carriers flying less than half last year’s services.

Analysts said that the company would now face difficulties finding airlines willing to order new planes due to the pandemic.

Citi analyst Jonathan Raviv said: “The 737 MAX is now a demand problem where Boeing has to find airlines willing to take airplanes.”

“Before Covid-19, it was a supply problem where airlines were desperate to take as many airplanes as possible. So we don’t see the inventories clearing or production rates normalizing until 2023.”

Teal Group analyst Richard Aboulafia agreed, saying: “It’s a solid step forward…but the market really won’t need new-build planes for a few years, since there are 387 737 Max’s waiting to return to service, and 450 already-built 737 Max’s waiting to be delivered.”

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“Boeing needs to re-start production at some low level. But they won’t get above 20 per month for at least two years, and they won’t get to where they wanted to be – over 50 per month -until the middle of the decade.”

The Federal Aviation Agency (FAA) administrator Steve Dickson signed an order lifting the ban today, as well as laying out the changes that Boeing needed to make to the model.

The body has demanded new pilot training and software upgrades to deal with a stall-prevention system called MCAS, which was found to be at fault in both crashes.

But before the 737 Max can re-enter wider service, aviation authorities in Europe, China, and Brazil will have to give their own approval.

That marks a considerable shift from previous norms, where smaller regulators were happy to follow the guidance of the FAA.

As for Boeing’s 450 existing models, the agency will inspect each of them individually to ascertain their readiness to be flown again.

Read more: Fatal Boeing crashes result of ‘horrific culmination’ of events

Boeing chief exec David Calhoun said: “We have implemented a series of meaningful changes to strengthen the safety practices and culture of our company.”

“We have also undertaken a thorough assessment to ensure that our systems meet all regulatory standards. Every next plane we deliver is an opportunity to rebuild our brand and regain trust.”

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