You might think that with just 387 aircraft grounded from existing deliveries, the cost isn’t that immense. Take into account the extra aircraft that would have been in service by now and add 250 – that’s 617.
Up to the end of July airlines lost around $4.1 billion in revenue.
China Southern lost 3,653,816 seats, Air Canada 3,268,291, Southwest 2,962,400, Turkish Airlines 2,706,367, American 2,186,292, and Norwegian Air, 2,178,036.
Add to that losses from smaller operators like Icelandair who only yesterday announce losses as high as $90m, TUI who are warning of losses up to £200m, RyanAir who are also forecasting heavy losses, and the list goes on.
These aircraft were factored into fares, seating, timetables and profit and loss figures 12 months before they were even delivered.
Global air passenger traffic according to IATA, is up 5% although European travel has slowed markedly this year. The average flight load factor is by all accounts up 1.4% and most aircraft are flying 84.4% full – a new global record.
Big US Airlines like Southwest and American are cancelling around 150 flights per day because of the missing 737MAX’s in their inventories. United is dropping around 75 a day. Its not the end of the world, but I know from the experience of close friends it has had an impact – two of them had flights cancelled from New York to Miami and from Philadelphia to San Francisco, causing considerable inconvenience. Multiply that by thousands of customers.
Norwegian has been hard hit – indeed it’s a double whammy for the airline having suffered at the hands of the 787 Dreamliner Rolls Royce engine issue, its loss of operational MAX aircraft has impacted its Providence and Stewart operations from Ireland. Shinny new MAX’s were scheduled. Add to the financial cost a $99 each way fare sale to stimulate demand before the grounding. Then being forced to use one 789 to stand in for two MAX’s – and bus everyone from Stewart to Providence – and profits are long gone and turning into a sharp loss. A loss thats digging deep into the remnants of last years capital injection, already nearly exhausted. Norwegian is keeping very – unusually – quiet right now, trying to avoid attracting any attention to its perilous finances.
Like the others, Norwegian has had to finance multiple wet lease aircraft, none of which was budgeted for.
Airlines have gotten inventive, United somehow acquired 19 used 737-700’s it will add from December 2019. Air Canada has even gone as far as wet leasing Qatar Airways to fly some of its trans-Atlantic routes.
Airlines are so desperate, even elderly 737-200’s have been dug out of storage – one Canadian airline, Sunwing, has wet leased two to cover for the loss of its four MAX’s.
As usual, one mans misery is another’s good fortune. Leasing companies and short term wet lease specialists can barely keep up with demand. Lease prices for almost any age of A320 have risen by 20%, HiFly is almost permanently busy. Except that is for the A380, which seems to spend a large number of days doing nothing. Its been busy flying to Caracas in Venezuela lately – something not many airlines are prepared to do for understandable reasons, but for example between the 3rd and 20th June in went nowhere. Even for the desperate, the A380 seems a bit too much.