Boeing’s 737 Max Will Return to a Devastated Aviation Industry

Boeing’s 737 Max Will Return to a Devastated Aviation Industry

Boeing’s 737 Max Will Return to a Devastated Aviation Industry

Boeing’s 737 Max Will Return to a Devastated Aviation Industry

“It’s not phenomenal, but I don’t think it’s all that dire for the Max, despite Covid and everything else,” said Sheila Kahyaoglu, an aerospace and defense analyst with Jefferies, an investment bank.

It may seem misguided for an airline in the midst of a major crisis to buy a tarnished jet that costs tens of millions of dollars, but experts say there is good reason many companies like Southwest Airlines and American Airlines will stick with the Max. The plane can offer substantial savings on fuel and maintenance that are even more valuable in lean times. Other airlines might find it difficult to walk away from orders they have already placed, and will reluctantly go through with purchases.

A new plane can last a generation, and the Max’s efficiency matters a lot because fuel can account for about a fifth of an airline’s operating costs. Boeing says the plane uses at least 14 percent less jet fuel than its predecessors. That could yield double-digit increases in profits for airlines, said Vitaly Guzhva, a professor of aviation finance at Embry Riddle Aeronautical University. “There’s still a pretty strong business case for the Max.”

Southwest, for example, has nearly 750 planes in its fleet, each some version of the 737. If it had been able to replace part of its fleet last year with the more than 275 Max jets it hopes to own, Southwest could have saved more than $230 million in fuel costs, according to Dr. Guzhva’s math. Boeing says the plane offers fuel savings of more than $10 million over its 25- to 30-year life span.

Airlines can also point to fuel savings as an indication of their environmental stewardship to customers who are increasingly cognizant of air travel’s contribution to climate change. Others might just want to apply the money saved to lowering the price of tickets to lure business.

The jet could yield big savings on maintenance, too. New planes often come with warranties, and expensive engine overhauls are typically needed a few years after those end, said Robert Spingarn, an aerospace and defense analyst at Credit Suisse. If the timing is right, an airline might choose to replace a plane in need of major repairs with a Max.

“When you have a brand-new airplane, you don’t have to think about that kind of expense,” Mr. Spingarn said. “There’s going to be some that say, ‘I’m sticking with the Max because the math works better for me than not taking it.’”


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