737 MAX Groundings: The Effect on US Legacy Carriers

The groundings of the Boeing 737 MAX, following the tragic accidents of JT610 and ET302, have had notable effects on the US’ largest carriers - American, United, and Delta.


Both American and United have been negatively affected by the universal groundings of all MAX variant 737s. American, operating 24 of the MAX 8 with 5 on order, and United, with 14 MAX 9s active and 16 on order, have been cancelling numerous flights through the summer months - originally set to be operated by the grounded type.

Image: American's MAX 8 (© Boeing)

American, having cancelled roughly 115 daily MAX flights through mid-August, estimates that the company will lose $350 million by the time their MAX aircraft return to the skies. In a letter to employees, American Airlines CEO Doug Parker and President Robert Isom stated, “We remain confident that the impending software updates, along with the new training elements Boeing is developing for the MAX, will lead to recertification of the aircraft soon.”


Image: United's 737 MAX 9 (© United Airlines)

United, being forced to cancel 130 flights during the month of April, is also losing millions to the 737 MAX crisis. The airline has cancelled flights operated by the type through early July. In an interview for CNBC, United CEO Oscar Munoz stated, “We do not know yet, safety is by far...the most important part of it. So right now it [July] is our best projection, and I think everyone has their own. So we really have no sense of it [the return to service date] at this point in time.”


On the other hand, Delta is flying high.


According to Bloomberg, Delta’s seat-per-mile revenue was up 2.4% during the first quarter of 2019, and shows growth of up to 3.5% more during Q2. On top of other factors, this uptick in growth can be attributed to Delta’s decision in not operating the 737 MAX.


Image: Delta's 737-900ER (© Delta Air Lines)

Since Delta’s rival carriers are hemorrhaging money - due to expensive aircraft equipment changes and refunded tickets - the airline is able to come out on top, having to deal with none of the problems that come with slashing parts of your fleet for months.


Even though Delta does not operate the scrutinized type, CEO Ed Bastian still said, “We have the ultimate confidence in Boeing. They are a great partner. Our largest fleet partner is Boeing. I know they're going to get to the right answer... We'll stay close to Boeing and see how they progress.”


Even with the current circumstances, both American and United have plans to resurrect their MAX aircraft from storage, and fly them well into the future - while Delta plans to keep their Next Generation 737 fleet flying for years to come.

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