Scott Kirby, United Airlines CEO, indicated on the earnings call this morning that United is developing an alternative plan without the 737 MAX 10 given the fallout the MAX 9 problems are having on Boeing’s ability to certify and deliver those aircraft.
Kirby indicated that it was clear that Boeing could not contractually deliver the aircraft on time, given the fallout from the MAX 9 problems. If United were to cancel its order for some 270 MAX 10s plus 200 options, which is likely if Boeing fails to gain an FAA waiver to certify the aircraft with a known flaw, the MAX 10 program could be in jeopardy.
The MAX 9 problems are hitting United hard, as it is the largest operator of that type. The MAX 9 represents 8 percent of capacity in the 1st quarter of 2024. The company expects the MAX to be grounded in their current planning through January. While United has not canceled any MAX orders to date, it is not ruling out the possibility of the MAX 10 program being delayed too long. “The MAX 9 grounding is probably the straw that broke the camel’s back for us,” said Kirby. “We’re gonna build an alternative plan that just doesn’t have the MAX 10 in it.” He made similar comments in an interview with CNBC
In their customer surveys, the competing Airbus A321neo received the highest-ever scores from United customers during the 4th quarter, as mentioned in their quarterly financials press release.
The bottom line
The fallout from the MAX 9 grounding could quickly spiral for Boeing if it is forced to delay the MAX 7 and MAX 10 programs beyond the time frame customers are willing to wait. With Southwest, United, and Delta all major purchasers of the new 737 variant, the impact on Boeing will be significant.
United does have the option to change their MAX 10 orders to other MAX variants. The question is whether a strategy focused on increasing capacity on existing routes is compatible with their business plans. Time will tell, but a key Boeing customer is now very angry, with far-reaching implications.