All Boeing 737 MAX aircraft have been grounded after two crashes in only five months. One country after another banned the aircraft over the last couple of days. Finally, the Federal Aviation Administration (FAA) of the United States took a stand and did the same. On Wednesday, the FAA issued an “Emergency Order of Prohibition”, prohibiting further operation of the aircraft in the United States.
Right now 387 737 MAX aircraft are on the ground pending further investigation. Daniel Elwell, the Acting Administrator of the FAA, stated that new evidence showed that the movement of the Ethiopian Airlines aircraft was similar to the movement of the Lion Air aircraft involved in the crash in October. Accordingly, the FAA made the decision to order “the temporary grounding” of the aircraft.
What does the worldwide ban of the aircraft mean for the Boeing company?
The Boeing 737 MAX has been Boeing’s fastest-selling aircraft in history. Currently, the aircraft manufacturer has almost 5,000 open orders for the aircraft. The aircraft is a big moneymaker for Boeing, or it was set to be anyway. Boeing’s shares have fallen as much as 13% is week, leading to their investors losing more than $26 billion.
With all these aircraft sitting on the ground, the impact to their owners is going to be significant. Let’s assume that one aircraft can carry 180 passengers and airlines operate that plane on four flights a day. For all of the grounded airplanes, this means that more than 278,000 seats are missing each day.
Currently, there are 59 worldwide operators of the aircraft. The operators with the largest 737 MAX fleets are Southwest Airlines with 35 aircraft, and American Airlines, Air Canada and China Southern who all have 24. There is a good chance that we will see delays and cancellations on some of the 737 MAX flights if the airlines do not have replacement aircraft available.
The ban of the 737 MAX aircraft will almost certainly lead to airlines asking Boeing for compensation for the grounded aircraft. After all, the airlines will lose money while their aircraft are sitting on the ground.
How long will the aircraft remain grounded?
At this point, we really do not know. According to the FAA, “the grounding will remain in effect pending further investigation, including examination of information from the aircraft’s flight data recorders and cockpit voice recorders.” We do not know how long the investigation will take.
Nevertheless, we should be glad that all aircraft are on the ground instead of risking another crash. Hopefully, Boeing and the other parties involved in the investigation will find a smoking gun soon and will be able to implement a comprehensive fix in the near future.
How do you feel about the grounding of all Boeing 737 MAX aircraft?