737 MAX 10: Billions on the Line

This is a crucial program. First, because it's the size the market is chasing. Take a look at this chart provides the evidence. Boeing has been missing the explosion in the single-aisle MOM market for far too long. Boeing invented this segment after all. The 757 comes up every time anyone discusses MOM. Just a reminder: The last Boeing 757 was ordered on September 11, 2003, by Shanghai Airlines and delivered on November 28, 2005. That's over 25 years ago. [caption id="attachment_186628" align="aligncenter" width="580"] AirInsight[/caption] Boeing is suffering from missing this market. The MAX 10 is their tool to close the gap. In the meantime, Airbus' A321neo continues to clean up because of its monopoly position. The second reason is that this is the second-best seller of the MAX family. Delays to the program are a material negative to the firm's cash flow. Major Milestone Achieved Boeing entered the final phase of MAX 10 certification flight testing this month, marking incremental progress in a program delayed by technical fixes and heightened regulatory scrutiny. The FAA authorized Boeing to proceed to Phase 2 of Type Inspection Authorization (TIA) flight testing just before Christmas 2025. This phase allows evaluation of a wider range of systems, including avionics, propulsion, and flight controls, and represents a required step toward type certification. The Engine De-Icing Issue Despite progress, a major technical hurdle remains unresolved. A key barrier to certification is the engine inlet anti-ice issue: regulators have determined that, under rare icing conditions, ice accumulation could damage an engine or affect thrust performance. The problem stems from the nacelle's composite design. Prolonged use of the anti-ice system, which directs heated air into the engine inlet cowl to prevent ice accumulation, can cause thermal damage to the composite material. Boeing is implementing software updates and design modifications, but each change requires validation through testing and regulatory review. This same issue also delayscertification of the MAX 7, effectively linking the approval timelines of both aircraft and complicating Boeing's broader production planning. Timeline Expectations Boeing CEO Kelly Ortberg and executives express confidence that certification could happen in 2026, but industry analysts are more cautious: Optimistic scenario: Late 2026 certification Realistic scenario: Certification extending into 2027 First deliveries: Potentially late 2026 or early 2027 As Scott Hamilton of Leeham Company told Reuters: "It's progress, but until the MAX 10 is certified, it's not." The Business Case - What's at Stake The MAX 10 represents enormous financial importance to Boeing: Orders: Over 1,200 firm orders worth an estimated $40+ billion in revenue Key customers: Alaska Airlines (105 aircraft), United Airlines, Delta Air Lines, WestJet, Ryanair, and Aviation Capital Group. Not the customers you want to annoy. Market position: Direct competitor to the dominant Airbus A321neo Capacity: Seats up to 230 passengers, making it ideal for high-density short-to-medium haul routes Successful certification unlocks billions in revenue, estimated at over $40 billion from these orders, and helps restore investor confidence amid ongoing financial strains, including production caps and quality control issues. It also helps Boeing start paying down its mountain of debt. The Airbus Advantage While Boeing has struggled with MAX 10 certification delays since its first flight in June 2021, Airbus continues to dominate the high-capacity narrowbody segment: A321neo deliveries: Over 2,500 aircraft delivered, generating $150+ billion in revenue Market dominance: 10-year head start if MAX 10 certifies in late 2026. This is arguably one of the most telling KPIs, perhaps giving Airbus a once-in-a-generation lead. Many argue Boeing can never catch up; it must leapfrog the A321. But the various studies all seem to have led nowhere. Customer patience exhausted: Many airlines couldn't wait and ordered A321neos years ago An Airbus Americas CEO stated: "The A321neo family has become THE industry standard for high-density narrowbody operations. While Boeing has been struggling with MAX 10 certification for 5 years, we've delivered 2,500+ A321neos, generating $150+ billion in revenue. The market has spoken." Ouch. Alaska Airlines' Bold Bet Alaska Airlines' January 2026 announcement ordering 105 737 MAX 10s represents the single largest bet on the still-uncertified aircraft—and potentially Alaska's biggest strategic risk. This came exactly two years after the door plug blowout incident on an Alaska Airlines 737 MAX 9. Alaska CEO Ben Minicucci expressed confidence that the aircraft will be certified this year, but the order underscores both the strategic importance and the risk: Alaska's international expansion plans depend on deliveries in 2027. Regulatory Environment The certification process reflects the lasting impact of the fatal MAX 8 crashes in 2018-2019 that killed 346 people. The FAA maintains heightened oversight with: On-site inspectors at every test flight Mandatory congressional review of the redesigned crew alerting and angle-of-attack systems "No political timeline" mandate - safety over speed Detailed validation of all technical fixes Related Programs The MAX 7 certification is linked to the MAX 10 due to the shared engine de-icing issue. Southwest Airlines CEO Bob Jordan recently told Reuters he expects MAX 7 certification by August 2026, with Southwest as the launch customer holding over 90% of MAX 7 orders. There are internal rumors at Southwest that they may not want the 25 built. Seven months ago, Ortberg was discussing certifications for the MAX programs at the end of the year. Now we are in a new year. Bottom Line Phase 2 testing is genuine progress after 4.5 years of delays, but calling it a "breakthrough" is premature. The hardest certification work—resolving the engine de-icing issue and satisfying FAA safety requirements lies ahead. Until the FAA issues final approval, Boeing cannot begin full-scale production or deliveries, leaving customers, investors, and Boeing's financial recovery in limbo.

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