It is the year of transition for more than just the airlines as the recovery continues. Boeing is starting to see a significant rebound concerning the Boeing 737 MAX. After overcoming some hurdles earlier this year post-recertification, the MAX is good to go in over 175 countries worldwide. One of the largest markets where the jet has not yet been recertified is China. Even here, Boeing sees a pathway to recertification.
Boeing sees a pathway back to recertification on the MAX in China
Boeing’s executives discussed the rebound of the 737 MAX program in 2021. The company has delivered 130 aircraft since the ungrounding as of July 25th. Around the world, 30 airlines have brought the aircraft back into service and flown over 95,000 commercial revenue flights. All of this comes as 175 countries have reopened their airspace for 737 MAX operations, including in key markets like the US, Canada, Mexico, Brazil, and Europe.
However, one country remains a sticking point: China. The country has been slow to move forward on the return of the Boeing 737 MAX, and analysts, industry professionals, and Boeing have been keenly watching the moves made in this space. Here is what CEO Dave Calhoun said about recertification on Boeing’s second-quarter earnings call:
“We continue to work with global regulators and still anticipate that the remaining regulatory approvals will occur this year, including China, and as always we will follow global regulators lead in the steps ahead.”
He was pressed further on China, where he added:
“First of all let’s remember they have 100 airplanes on the ground in China that airlines want to get into the air. They’ve got the Olympics coming, and they want to move down that path. So they have a lot of natural incentive to want to do it. We’ve been working closely with [the CAAC] from the beginning. It’s constructive, technical issues are being resolved, in fact, for the most part, I think they’re all behind us, and yes I anticipate there will be test flights conducted in certification. As we said, we expect that we will get that before the end of this year.”
The Civil Aviation Administration of China (CAAC) has taken a close look at the 737 MAX. It was one of the first major regulators in the world to ground the type in early 2019. However, in recent weeks, China has moved to recertify the MAX.
Other factors could hinder Boeing’s ability to bring the MAX back into service in China. This includes trade disputes between the US and China.
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The incentive for getting the MAX back in the air
2020 was a very off year for the industry, and there was less pressure on airlines from a capacity perspective to get the MAX back in the air. Before the crisis hit, airlines were canceling flights, tweaking schedules, and considering taking on leased aircraft, or even moving to a different manufacturer, to cover the capacity crunch.
Now, with the aviation industry rebounding – including in China – that same kind of pressure is coming back. The big three Chinese carriers, China Eastern, Air China, and China Southern, all have MAX planes in their fleet that are on the ground, including sizable orders for more airplanes. Even slightly smaller airlines, like Xiamen Airlines and Shenzhen Airlines, have MAX planes parked and awaiting approval to fly.
In 2022, the Winter Olympics are expected to be held in Beijing. Running in February, this will be an opportunity for Chinese carriers to increase domestic capacity and, depending on travel restrictions, boost regional capacity using the MAX. China has been a market that recovered fast early on and can further recover, which could be accelerated by the Winter Olympics.
Lack of recertification could have other impacts
Mr. Calhoun also discussed what would happen if recertification does not happen this year:
“If we get to the end of the year, I often use the beginning of the following year, but I’ll start thinking about it very hard and by the end of the year. If we get to that moment, importantly, we’re not within a minute of getting certification in some way, we do have to consider real actions with respect to what the future rate ramp looks like.”
Boeing wants to go from the 16 airplanes it is producing per month to 31 per month in 2022, with future ramp-up planned as demand warrants. The 737 MAX is a strong program from a revenue standpoint at Boeing, and it is eager to start producing the aircraft and delivering it to customers around the world – including in China.
Do you think the MAX will be recertified in China this year? Let us know in the comments!