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December 4, 2023
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Yesterday Reuters reported that Boeing plans a May restart on MAX production.  This planning is despite the fact that the Renton plant is closed because of Covid-19 at least until March 25.  Even if the Renton plant reopens by the end of March, the 12,000 workers at this facility will return to a plant that has been idled since January.  Getting everything restarted may take some time.

In the meantime, the market changed dramatically.  Air travel fell off a cliff and is going to take some time to come back.  Boeing has some 400 MAXs parked all over the nation, waiting to be delivered.  Before these can be delivered, they need to be updated according to the final FAA requirements. These are not final because the FAA wants the return to service to comply with other approving agencies.  The EASA has, potentially, some additional requirements that need more MAX modifications. A further complication; with the Brexit, the MAX will need to also be certified by the UK’s CAA.  When was the last time that organization undertook such a program? This means the British Airways MAX fleet entry into might be impacted.

Restarting the Renton plant, therefore, is something of an act of faith.  Not only does Boeing have the parked backlog to deliver, but demand for the MAX may also have shrunk a lot more than has been made public. To date, we know of a few airlines that have canceled MAX orders or converted MAX orders. (Air Canada -11; Air Lease Corporation -9; Business Jet VIP Customer -1, JIA -10 and Oman Air -10)  It is a safe bet to assume there are plenty more to come.  Based on the numbers to date, it is plausible that 20-25% of the MAX backlog may evaporate.  The hit to Boeing’s order book will be mitigated by some customers who are switching from the MAX to 787.

Boeing still will have a big backlog for the MAX stretching out some years.  But it will almost certainly no longer be for seven-plus years.  The MAX is arguably the commercial aircraft with the worst reputation in the modern era.  This is a big problem when one considers the power held in the hands of consumers with cameras and mobile phones.  Boeing has no margin for even the hint of an error or mishap. That which would have been dismissed as an aberration two years ago now will lead world news broadcasts. 

This is a distinctly unattractive outcome for the airlines that will operate the MAX.  Things are going to happen because mechanical equipment fails. But because of the MAX’s history, every tiny thing will be magnified.  Airlines have zero tolerance for anything that hints at a safety compromise.  For this reason alone, we suspect the MAX’s future is short-lived.

Given the parked MAX fleet to be delivered, only once suitably modified, the radical change in air travel demand, and the relative unattractiveness of the MAX, Boeing faces a steep uphill slope.  A slow MAX production restart is the only option.  The grounding of the MAX came at a time when travel demand peaked for this cycle, which was poor timing for Boeing.  Boeing may be ready to restart the MAX project but the world has changed and may not want the MAX as much as it once did.

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Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

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