Airlines Can’t Refurb Some Older Aircraft Due To MAX Grounding

Advertisement:

The recent financial results of leading aircraft interior company Astronics has painted a stark picture of the reality of the 737 MAX grounding. As airlines are often reluctant to take older aircraft out of service for retirement or refurbishment, suppliers of cabin products are taking a double hit from the crisis. Not only is Boeing no longer making the MAX, losing suppliers millions of dollars of business each month, their other customers are also deferring jobs in a bid to keep services flying even with a lack of MAX.

Boeing 737 MAX
The 737 MAX grounding has led to airlines being unable to carry out planned refurbishments. Photo: Getty

Boeing’s suppliers take a hit from the MAX

According to Runway Girl Network (RGN), some airlines are putting off non-essential upgrades to their cabins due to the ongoing Boeing 737 MAX grounding. The publication bases this assessment on the words of president and CEO of Astronics, Pete Gundermann, during his recent earnings call, where he said,

“…we assumed that the 737 MAX would see a return to service at or near year-end. And at that time, we would expect a pretty quick production ramp from 42 airplanes a month to 47 a month, eventually going to 57, probably sometime out in 2021. Those expectations proved way off base, instead, 42 aircrafts a month have gone to zero and 800 airplanes plus remained grounded.

“The 800 airplanes grounded essentially cuts the capacity for their airlines around the world. And given the lack of capacity that they have, they are reluctant to take airplanes out of service for the passenger amenity aftermarket products that we offer … with a shortage of capacity, we have seen starting late last year, a tendency toward deferral, where programs that were in process, have been kind of pushing out to too late.”

For companies like Astronics, programs like the 737 MAX are their bread and butter. Astronics estimates it puts around $100,000 of products into each aircraft produced. Even at Boeing’s reduced rate of 42 per month, this represented over $4m of business for the company each month. Now the production has stopped entirely, it’s a massive hit for companies like Astronics and all Boeing’s other suppliers, particularly as the halt of production came with little to no warning to suppliers.

Boeing spirit Aerosystems 737MAX getty images
Spirit AeroSystems delivers the fuselage for Boeing’s 737 MAX. Photo: Getty Images

Boeing has cheerfully proclaimed its success in that it has not, as yet, laid off any workers. However, things aren’t as rosy for suppliers. Astronics themselves have laid off some 50 employees while fuselage manufacturer Spirit AeroSystems has had to part company with as many as 2,800 workers.

Advertisement:

And all the other suppliers do too

But the problems for aerospace firms only begin with the MAX; they certainly don’t end there. All over the world, airlines that had planned retirement, refurbishments and maintenance for older aircraft are being forced to keep them in service due to the lack of the 737 MAX. At the time of the grounding, there were just short of 400 aircraft in operation. By now, there should have been a further 600 or so.

That’s a whole lot of capacity missing from the worldwide aviation network. Getting on for 1,000 planes worth in fact. While airlines are coping with the MAX grounding really rather well, the fact they are being forced to hold on to other aircraft for longer means there’s a massive knock-on effect for hundreds of suppliers.

Boeing 737 MAX
As many as 1,000 aircraft are missing from the worldwide fleet. Photo: Getty

Makers of seats, carpets, IFE equipment, bulkheads, lighting, connectivity solutions… all these companies are finding more and more of their jobs are being deferred as airlines just can’t afford to have aircraft out of service. As a result, financial reports like Astronics’ are increasingly common, as suppliers find themselves sidelined in favor of keeping routes flying.

Advertisement:

Of course, with the ongoing coronavirus situation dampening people’s appetite for travel, this situation could end up being resolved, regardless of airlines’ wishes.

Advertisement: