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Aviation executives frustrated when Boeing 737 Max ground support cost nearly $ 1 billion



A Southwest Airlines Boeing 737 passenger plane takes off from San Antonio International Airport in Texas.

Robert Alexander | Stock Images | Getty Images

The anchorage of 737 Max after two fatalities continues to drag, frustrating airlines that airlines are missing out on nearly a billion dollars in revenue just this year.

Southwest Airlines, the largest US operator of Max, said the ground support cost $ 21

0 million in revenue over the last quarter, $ 435 million in revenue for the first nine months of the year, and said it expects "the damage will grow into 2020. "

"We are not happy about our situation," CEO Gary Kelly told CNBC's Squawk on the Street.

Southwest, which had 34 Max aircraft in its fleet due to ground support, more than any other US airline, provided stronger profits and revenues in the important third quarter, which includes the summer season. But the ground support shrunk sales and reduced capacity growth plans. Southwest expects to receive around 75 Max aircraft from Boeing next year when ground support is lifted, but the timeline is uncertain.

"We put our future in the hands of Boeing in Max and we're grounded," Kelly said. "I want to settle with Boeing to make up our damage."

Kelly said that Southwest, which only operates Boeing aircraft right away, would consider other types of aircraft, but he has said such a complex business will take years. [19659002] Boeing has shared with regulators some software updates for its beleaguered best-selling aircraft after an air traffic control system became involved in a Lion Air crash in October 2018 and an Ethiopian Airlines crash in March. However, regulators have not yet announced the changes. Federal Aviation Administrator Steve Dickson said at an industry conference Tuesday that he has not finished evaluating things like human factors to determine if the planes are safe and that the process will take several weeks.

"We have considerable work to do to get there," Dickson said.

American Airlines on Thursday said that ground support, now in its eighth month, would reduce its premium revenue by $ 540 million this year, up from an estimate of $ 400 million made in July. The carrier reported higher-than-expected revenues, while revenues came in at $ 11.91 billion slightly lower than Wall Street estimates.

US CEO Doug Parker said he wants to make sure the carrier is compensated for the disruptions. US, Southwestern and United States have canceled thousands of flights due to ground support and scrambled to switch to other aircraft to meet passenger demand. Airlines have repeatedly delayed when they expect the aircraft to return to their plans, but for now, no US airline is planning to return until at least January.

Boeing in the second quarter took a $ 4.9 billion after-tax tax in the second quarter to offset airlines, but the final cost is unknown as the grounding continues, the company said Wednesday.

"We are working to ensure that Boeing shareholders bear the cost of Boeing's errors, not American Airlines & # 39; shareholders," he said of an earnings call.


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