ALC Could Reorder The 737 MAX Dependent On Ungroundings

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Leasing company Air Lease Corp may reinstate some of its canceled 737 MAX orders if more regulators choose to recertify the plane. The aircraft lessor, one of the largest in the world, had an order book of 195 MAX jets by the end of 2019 before the pandemic led to a flurry of canceled orders.

Boeing, 2020 Loss, Aircraft Deliveries
Air Lease Corp canceled dozens of MAX orders through 2020. Photo: Getty Images

ALC waits on regulators to recertify the MAX

The Boeing 737 MAX spent over 20 months on the sidelines before its recertification in November. The MAX is now back in service, and several carriers are slowly reintroducing the plane as they look to rebuild public confidence. So far, just a few countries have ungrounded the MAX, but many are expected to follow suit in the coming weeks.

The European Union is close to recertifying the plane, while Canadian MAX flights are set to resume at the beginning of February. With the MAX slowly but surely taking to the skies again, Air Lease Corp is now considering reordering some of its canceled 737 MAX orders, according to BloombergQuint.

Boeing 737 MAX, Transport Canada, Test Flights
The MAX has been recertified in just a few countries so far, but more are on the way. Photo: Getty Images

However, whether or not the move materializes will depend heavily on aviation regulators around the world. While several countries are following the FAA’s decision to unground the plane, progress has been slow in key countries like China. Air Lease Corp Chairman, Steven Udvar-Hazy, told Bloomberg,

“Not having approvals from the European Union, China and Russia makes it hard for us to reactivate orders for white tails.”

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Over 100 unfulfilled MAX orders

Despite canceling 19 MAX planes last year and converting other orders to Boeing 787s, Air Lease Corp still has 107 unfulfilled 737 MAX orders. With the COVID pandemic hitting just a year after the MAX was grounded, Boeing eventually suffered over 1,000 MAX order cancelations, with Air Lease Corp also losing valuable plane lessees.

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Boeing 737 MAX grounding getty images
Airlines are reluctant to order the 737 MAX in testing economic times. Photo: Getty Images

Mr. Udvar-Hazy emphasized that, if Air Lease Corp does reinstate some of its orders, it won’t come near the 200-mark. He did reveal that the company plans to bolster its fleet by the summer of 2021, with a particular focus on the MAX 8 and 9 planes.

Problems finding a home for the MAX

With some regulators still reluctant to make progress on ungrounding the MAX, Air Lease Corp hasn’t yet committed to picking up its canceled MAX orders. If the MAX is certified in some regions but not others, airlines will find it difficult to operate. For example, the MAX won’t be able to enter the airspace of any country it hasn’t been recertified in, causing airlines major headaches.

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737 MAX
Carriers may ignore the MAX and look at other options. Photo: Getty Images.

With inconsistent regulations in different regions of the world, airlines will find many routes are either not possible or not economically feasible. For Mr. Udvar-Hazy, the key is getting more regulators to ungrounded the MAX, which will encourage carriers to start using the aircraft.

“Delivering more planes, and finding airlines or leasing firms to claim the orphaned ones, depends on more regulators following the U.S. Federal Aviation Administration.”

Do you think airlines will have enough confidence in the MAX or will they look at alternatives instead? Feel free to share your thoughts in the comments.

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