The grounding of Boeing 737 MAX 8 planes across the globe is likely to cost airlines a whopping $4 billion, according to consulting firm Frost & Sullivan.
The 737 MAX is the newest family of Boeing’s single-aisle planes and is the fastest-selling aeroplane in Boeing’s history with about 4,700 orders from 100 customers worldwide.
Indian carriers SpiceJet and Jet Airways have a combined order of 430 planes of this Boeing variant, of which 17 planes had been delivered so far.
Until various countries and airlines started to ban the aircraft, there were nearly 370 of them flying globally.
“If the grounding applies to all aircraft, coupled with a deferral of the more than 400 deliveries planned for 2019, the bill (to airlines) will amount to more than $4 billion in 2019,” according to Diogenis Papiomytis, global programme director, commercial aviation, Frost & Sullivan.
Seek compensation
The airlines, however, would seek compensation from Boeing for the losses.
Mr. Papiomytis forsees the possibility of airlines cancelling their orders because of an economic downturn globally which has led to a situation where the growth in passenger demand had not kept pace with fleet expansion by airlines.
“Many airlines may take the opportunity and cancel orders for the 737 MAX, in the light of a possible downturn.
“Simply put, the business case for new aircraft in 2019 is completely different to 2015 or 2016, when the airlines placed their orders.”
Leg-up for Airbus
The crisis staring at Boeing could give its rival, Airbus, a leg-up.
“Boeing was late in announcing and marketing the 737 MAX, the newest version of its most popular aircraft programme, back in 2011.
“This gave Airbus a jump-start of over a year with their A320neo and it had not looked back since. In 2019, the neo had 5,700 aircraft orders against MAX’s 3,700.
“The Lion Air and Ethiopian Airlines 737 MAX disasters will, undoubtedly, push this gap even wider,” said Mr. Papiomytis.
The 737 MAX crisis may also impact Boeing’s sales across all its aircraft programmes. The aerospace manufacturer was expected to roll out its B777X aircraft in Seattle this week which has been postponed indefinitely. Its decision on a new mid-size airplane (NMA), that was expected in the next 12 months, could also be delayed.
More significantly, in the longer term, the crisis for Boeing may prove to be an opportunity for other players. “The role of Boeing in the duopoly of commercial narrow body aircraft is at stake. With the introduction of the Chinese Comac C919 and the Russian Irkut MC-21 in 2021, airlines will have more choice,” said Mr. Papiomytis. the Frost & Sullivan Global Program Director.
