Here’s How The Boeing 737 MAX Could Create An Aircraft Surplus

The reintroduction of the Boeing 737 MAX cannot come soon enough for those airlines struggling with the loss of capacity. However, some analysts are warning that the reinstatement of the type could lead to a glut of aircraft, and an oversupply by the time next summer arrives.

reintroduction of the 737 MAX
The reintroduction of the 737 MAX could create an aircraft surplus. Photo: flydubai

1,000 surplus aircraft

While the grounding of the 737 MAX has made life difficult for airlines over the past few months, the reinstatement of the type could bring with it a whole new set of challenges. Boeing has been churning out of the model of the plane since the grounding, albeit at a slightly reduced rate.

This, coupled with the reinstatement of the grounded aircraft and the ramping up of the production rate once the aircraft is cleared to fly could, in itself, present a whole new headache for the industry. Analysts are warning that this could lead to too many planes, and have raised concerns about oversupply.

reintroduction of the 737 MAX
Could an oversupply of aircraft become a problem? Photo: Boeing

Speaking at a briefing ahead of the Airline Economics Growth Frontiers conference today, Rob Morris, global head of consultancy at UK-based Ascend by Cirium is reported by Reuters to have said,

“Next year is the challenge. When the dam breaks and the MAX starts to flow, there are going to be a lot of aircraft. There could potentially be as many as 1,000 surplus aircraft next year.”

A glut of aircraft

In April, in the wake of the grounding, production slowed from 52 per month to 42. Despite problems with storing the completed airframes and concerns that production could be paused altogether, the company has continued at the same rate thus far, equating to 304 airframes built and undelivered.

As well as these, a further 387 have been passed to their owners, and are currently stored awaiting the green light to begin flying once more. This accounts for almost 700 aircraft which are, in theory, ready to enter service in time for summer 2020. But that is just a fraction of the 4,930 airframes on order.

reintroduction of the 737 MAX
Boeing is preparing to accelerate production and delivery of the 737 MAX. Photo: Boeing

In order to clear the backlog, Flight Global reports that Boeing plans to deliver MAX aircraft at a rate of as many as 70 per month once the grounding is lifted. In tandem with this, the company is preparing to raise the output to as many as 70 per month. Should these goals be met, we could indeed see as many as 1,000 extra aircraft in operation by the time next summer rolls around.

Is this really a problem?

While most 737 MAX operators will be happy to see their aircraft back in service or being delivered to their fleets, it’s undoubtedly going to be a challenge to reintegrate them smoothly. Many airlines have held on to older planes, extended leases and shuffled schedules to make up for the loss of capacity caused by the grounding of the MAX. Undoing all this work is going to be just as hard as it was to put it in place.

Rob Morris highlights the changing aviation environment too, arguing that the long uptick of aviation is beginning to slow, and that a sudden deluge of aircraft could overwhelm the increasingly fragile travel market. However, he does openly admit that it’s not as if all the hundreds of aircraft are going to enter service simultaneously.

reintroduction of the 737 MAX
It could take 18 months to two years to deliver the backlog. Photo: SounderBruce via Wikimedia Commons

John Plueger, chief executive of Air Lease Corp is optimistic, telling Reuters that,

“It is not as if all these MAX could be delivered over a one-, two- or three-month period … so it is not an open floodgate and 350 planes all coming onto the market tomorrow.”

What do you think; will the reintroduction of the MAX cause a surplus of aircraft? Let us know your thoughts in the comments.

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Fitz

The problems that have been caused will all be overcome in time. The only thing we all hope is that the MAX has been fixed properly. They also have the MAX10 coming out next year so the lots are going to be full of even more new and larger MAX’s

Vince

Both the max 7 and max 10 will likely be delayed due to the backlog.

Chris I.

The key to the return of 737 MAX aircrafts to service is a proper fix duly vetted and re-certified by FAA & international regulatory bodies! The aircraft design must be inherently safe, without software covering for deficiencies in aircraft flight performance. It is known that the new larger engines are mounted on the wing causing the aircraft to pitch up, which was “fixed” by software forcing the elevator to compensate for that. This did not work but caused 346 deaths!

Chris

I’m not really sure where the number of “1,000” extra planes. Correct me if I am wrong here, but the grounding and subsequent re-entry to fleet would not be “extra” aircraft. Those are on the book orders and have been accounted for by airlines. As more Max come online, more airlines will continue what was probably their original plan to retire older planes in their fleet. Maybe I am missing something here, but I’m just not seeing where the numbers will equal excess planes.

Vince

Chris
Airlines doesn’t lease the aircraft on a monthly basis. They are usually at least a few years. This would mean that aircraft originally headed for the scrapyard are going to remain in the air for the next few years until their lease are up. This shift in retirement schedule is what causes the surplus of 1000+ aircraft in the market.
Airlines will either pay a penalty for the early termination of the lease or keep flying them until the lease expires.

Matt

Some airlines had to lease older aircraft on a temporary basis. Some of these examples were definitely on a monthly basis. This is how companies like HiFly make their money.

Blair

Mr. Feinberg lost some credibility in my book when he referred to these payments as “a tribute to Boeing”. Nothing could be further from the truth. Every decision Boeing has made before, during, and after these two crashes has been calculated down to the penny.

Chuck

Some of the factors that may slow down the re-introduciton of the MAX series include: 1) Government Approval – not all aviation authroities are in sync with the FAA and may develop their own timetable 2) Passenger Acceptance – the jet has a stigma, customer acceptance will take time 3) Airline Acceptance – all the MAX jet current sitting in storage (both Boeing & airlines) require significant time and effort to achieve airworthiness status before the airlines accept new MAX airframes 4) Supplier Rebound – some of the suppliers may not be in a position to fluctuate production so quickly… Read more »

Frank

Chuck, unless I am wrong, I don’t think that Boeing has even submitted the final software updates to the FAA yet. I have not heard anything about this, which leads me to believe that they haven’t got the fix right and things are not going as easily as first thought.

Peter

I agree…which is why I was surprised yesterday when I read on Reuters that EASA expects re-certification in Q1 of 2020. Maybe they’ve seen a preliminary version of the fix and, on that basis, are provisionally prepared to give it their blessing. This suggests that EASA is going to accept the 2-AOA + pilot training option rather than the 3-AOA option, and that thus suggests a whole load of pilot training in the pipeline. Where the CAAC (China) is concerned, I expect that things will take a lot longer — particularly in view of the current trade war between the… Read more »

Blair

All very sound points you’ve elucidated Chuck. May I also throw in the recent announcement that American Airline’s 28,000 flight attendants are refusing to step foot on the 737 MAX until they are satisfied it is safe to fly on.

Peter

Chuck, with regard to your point (2), it’s interesting to note that the US Congress is going to continue its investigation of the MAX fiasco; this is probably likely to increase the stigma to which you refer.

https://www.reuters.com/article/us-boeing-airplane-congress/u-s-house-democrats-to-continue-probe-after-boeing-testimony-idUSKBN1XE283

K.P.

Oh Yes, Like US CONGRESS is certified to find out anything, its the biggest joke on Earth other than the UN, they just want to put on their dog-n-pony show to get some press out of the issue, as far as airline attendants, easy fix – pay off their union and they will be on-board so fast, ITS ALL POLITICS at this point.

G. E. Williams

Chuck You listed two big factors: Passenger acceptance, and airline acceptance. Airlines who have big marketing budgets, like Southwest and Ryanair, will likely reintroduce the MAX first. Other airlines will no doubt observe public reaction. And plan reintroductions accordingly.

Frank

I think Boeing has closer to 350 Max’s sitting around, collecting dust. We are now 7 months and 25 days (according to wiki) into it. Rounding up to 8 months; 8 x 42 = 336 plus the additional 10 for the first months full production of 52 gives us 346. If reports are to be believed and Boeing continues to produce 42 new jets a month, that makes 28 planes out of the parking lots per month (to get to 70). That’s a full year to clear the backlog – if the Max was un-grounded by the 8th month anniversary.… Read more »

Vince

Frankly I doubt the max will get any green lights by Christmas. They may very well drag till the very last day of the year and yet still claim that it got certify by the end of the year.
As for who will be the first to fly the max in service, my bet is on UA as they are the least impacted by the grounding.

Wilrich

First it was a big rush to get the MAX certified and now they are planning for a big rush to get the MAX back in the air in the shortest possible time – up to 70 per month. Instead of taking the time to do things properly Boeing just seems to make the same mistakes again.

Tomasi Turagava

Fact of the matter is, once the CENTER OF GRAVITY changed from previous generation Boeing 737 NGs to the MAXs, it signifies a design fault & one where no amount of software designs can rectify this predicament, only a brand new fuselarge aerodynamics to correct the fault. Still an unsafe aircraft for me.

In-Frequent Flyer

Because it was built with a different CG, this qualifies more of a different type certificate than an actual fault. MCAS was more of a design fault because it was not properly safeguarded.

Tony Jennings

The Safran Leap turbofans are just too heavy and mounted well foreward of the wing. The aircraft is not safe and never will be aerodynamically no matter how much tweaking is done to Mcas. It flys fine empty, but will 180 passengers fly when, when it is certified. Iam an ex airline employee and worked with the 200 series of the 737. No NEO option for the 737, but with the A320 yes.

Peter

Apart from the whole MCAS issue, I wonder what pickle forks are used in the MAX. If they’re the same ones as in the NG, they’re probably going to fail even more quickly (larger engines –> greater load). I wonder if regulators are going to look at this…

Vince

I wonder too… But I’m betting that the regulators are not looking into this for now as it will only make the whole situation look worse

Jack parman

Do what every Corp does, change the name, retest and certify correctly, then fly the hell out of the aircraft? Retired Boeing employee!

K.P.

At this point and time, anybody who can identify a plane has put their 2 cents in on the MAX. It has people going through things that NEVER had an issue and lets not forget, the 2 crashes, 1 has a final report out that states 9 — count em 9 issues, the plane was only 1 — missing maintenance logs and Ethopian airlines has opened their logs and yet to come out if there is missing or tampering there. Stop the AIRBUS KOOL-AID and think about it, there multiple airlines flying the MAX, i have yet to find one… Read more »

Vince

Sloppy maintenance may have lead to the malfunction of the AOA sensors but if the MCAS has been programmed with better fail safe (instead of relying on a single AOA sensor when there are actually two installed on the aircraft) the two crashes would not have happened.
The same malfunction would not have brought down the A320 as the system relies on input signal from 3 separate sensor to respond instead of just one. The redundancy really does matter.

In-Frequent Flyer

The lack of redundancy for the system is still very relevant. Shoddy maintenance is a factor, but it doesn’t excuse Boeing for not making the system more idiot-proof.

stogieguy7

No matter how you slice it, the MAX is still an overwrought design that stretches the original 1960’s 737 airframe to the limits. Yes, we can cite prior models that have been grounded for a time (DC-10, etc.) but these were models with aerodynamically stable frames that had issues which were reparable via recall and refitting. In this case, it’s the basic design that is a problem. A problem that caused the geniuses at Boeing to have some $9/hour software guys in India to design a work around that they (hopefully) wouldn’t have to tell anyone about. We all know… Read more »

In-Frequent Flyer

Pretty sure they outsourced that bit to save money, which was stupid.

Melodie

I will never fly on a Boeing 737 MAX; and I think anyone working in the air or has worked in-flight for an airline will not fly it either. During my 10 year flight career I experienced over 15 emergency landings–most of those were from ‘no go items’ that miraculously healed themselves within a couple of hours of delay. The cash -bottom -line is everything, especially in today’s climate. A life for Boeing seems to be expendable … all they need to do is throw a few coins at the families of the deceased passengers. Let’s face it the two… Read more »

MPM1World

Beyond the best known plans, there will be contingencies such as passengers not willing to fly in the Max for a few months following re-certification and timing the return of older/leased models. Continuing current fleet re-shuffling will be the order of the day throughout 2020 for many airlines, with the implication that further new orders will be scarce. The good news may be that the above situation will give some needed time to Boeing and Airbus to catch up with their production chain and buy some time to correct deficiencies in their supply chains / engine manufacturers…