UAL to be hit by FAA grounding of B737-MAX 9 aircraft
- Following a serious in-flight incident involving an Alaska Air flight, the FAA has ordered the grounding of all B737-MAX 9 aircraft in the US.
- The grounding of the B737-MAX 9 marks the most considerable action since the entire Max fleet was grounded in 2019 after two fatal crashes.
- United Airlines, being a key operator of the B737-MAX 9, is likely to encounter financial and operational difficulties
FAA grounds all B737-MAX 9 aircraft in the US; other international airlines have also moved to ground the aircraft. In a significant move, the FAA has ordered the grounding of all B737-MAX 9 aircraft in the US following a serious in-flight incident, a decision that has been mirrored by aviation authorities worldwide. This directive comes after a window panel blew out on an Alaska Air flight 20 minutes after takeoff. This grounding is the most significant since the entire Max fleet was benched in 2019 after two fatal crashes, drawing renewed scrutiny to Boeing’s manufacturing processes amid increased production of the Max model. In response to this incident, international airlines operating the B737-MAX 9, including Turkish Airlines, Panama Copa Airlines, and Icelandic Air, have also suspended the use of affected jets for inspections.
United Airlines, as one of the primary operators of the B737-MAX 9, faces potential financial and operational challenges. United Airlines (UAL) and Alaska Air are the only two airlines operating the B737-MAX 9 in the US. The B737-MAX 9 makes up 7.9% of UAL’s total fleet capacity and approximately 3.5% of the total narrowbody aircraft capacity in the United States. The financial impact on UAL is yet to be determined, as the duration of this situation remains unclear, though airlines currently believe the required inspections will be completed over the next few weeks. While UAL is likely to receive compensation from Boeing for revenue losses due to the grounding, this may not fully offset UAL’s financial impact due to the fixed costs that the airline will continue to incur. Furthermore, this situation will hinder United Airlines from expanding its capacity, owing to its substantial backlog of B737-MAX 9 orders. However, two mitigating factors are 1) this incident occurred after the peak holiday travel season, and 2) the grounding will lead to tighter capacity in the domestic market, which could alleviate some pressure on the airlines, especially given the recent decline in domestic yields caused by intense competition.