American Airlines Group Inc has extended cancellations of Boeing 737 MAX flights through January 15, running contrary to the US plane maker's promises that the grounded jets would be flying again before the end of the year.
The largest US airline, which had previously cancelled approximately 140 flights a day through December 3, has upped its estimate for the impact of the groundings on third-quarter pre-tax profit to $140 million, $15 million more than a previous estimate.
Its shares, down about 16% in a rough year for airlines, rose, however, on the company's statement that lower fuel costs boosted margins in the third quarter. Boeing shares, buffetted this week by conflicting signals on European regulators' attitude to the MAX, were also marginally higher.
In July, American said that full-year profit would be reduced by about $400 million if the MAX remained grounded through November 2, and that figure is likely to increase now with a spillover effect into 2020.
This week, Boeing's sales numbers also showed that by the end of September, it had delivered only half the number of aircraft it did in the same period of 2018.
Regulators are still reviewing proposed software changes to the grounded plane with no certain timetable for the jet's return.
American, which canceled 9,475 flights in the third quarter, said that it expects to gradually resume MAX flights starting January 16, adding that software updates could lead to the Federal Aviation Administration's (FAA) "recertification of the aircraft later this year and resumption of commercial service in January 2020."
The FAA said this week that it is "following a thorough process, not a prescribed timeline, for returning the Boeing 737 Max to passenger service. The FAA will lift the aircraft's prohibition order when it is deemed safe to do so."
Review
The fast-selling 737 MAX has been grounded worldwide since mid-March while Boeing updates flight control software at the centre of two crashes in Indonesia and Ethiopia that together killed 346 people within a span of five months.
Among other US airlines that operate the MAX, Southwest Airlines Co has cancelled flights through January 5 and United Airlines Holdings Inc until December 19.
An ongoing regulatory safety review means a key 737 MAX certification test flight is unlikely before November, Reuters reported this week. Boeing has repeatedly said that it hopes to resume flights in the fourth quarter, which began on October 1.
FAA Administrator Steve Dickson told Reuters in September that the agency would need about a month following the yet-to-be scheduled certification test flight before the planes could return to service.
Boeing plans to revise the 737 MAX software to take input from both of its angle-of-attack sensors in the anti-stall system linked to the two deadly crashes and has added additional safeguards. Boeing is also addressing a flaw discovered in the software architecture of the 737 MAX flight-control system that involves using and receiving input from the plane's two flight control computers rather than one.
Meanwhile, airlines that had purchased the fuel-efficient MAX have cancelled thousands of monthly flights as they scramble to meet demand with slimmer fleets, eating in to profit and hurting some growth plans.
This week, the Southwest Airlines Pilots Association sued Boeing, alleging that the plane maker "deliberately misled" the airline and pilots about its 737 MAX aircraft. The grounding of the 737 MAX has wiped out more than 30,000 Southwest Airlines flights, causing over $100 million in lost wages for pilots, the union said. Boeing said the suit is "meritless."
Fort Worth, Texas-based American, with 24 MAX jets at the time of the grounding and dozens more on order, said that it expects to resume approximately 20 MAX flights a day in mid-January and plans to slowly return the MAX into commercial service throughout January and into February.
News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.
