IAG ‘order’ a blessing to Boeing, says Ian Taylor

International Airlines Group signing a letter of intent to order 200 Boeing 737 MAXs on Tuesday could barely have been more welcome to the beleaguered aircraft manufacturer.

But it was hardly a godsend, the announcement carefully timed during peak media interest in the Paris Air Show.

It was not even an order by IAG – owner of British Airways, Iberia, Aer Lingus and Vueling – though it was widely reported as such. It was a letter of intent to order, “subject to formal agreement”.

Nonetheless, IAG chief executive Willie Walsh’s declaration of confidence in the 737 MAX would have sounded something like a blessing to Boeing chiefs.

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Walsh told the world’s media: “We have every confidence in Boeing and expect the aircraft will make a successful return to service.

“We’re certain these aircraft will be a great addition to IAG’s short-haul fleet.”

Walsh will have received a substantial discount on the $24 billion list price of the aircraft for his sense of timing, of course. One analyst suggested he got a “staggering” bargain.

The ‘deal’ – the first piece of good news for Boeing and its MAX since the second MAX disaster in five months, in Ethiopia on March 10 – was doubly important given Walsh is a former 737 pilot.

He recounted experiencing the MAX’s manoeuvring characteristics augmentation system (MCAS), which has been implicated in both crashes, on a simulator and insisted he would “not hesitate” to board a MAX “tomorrow”.

 

A December return date?

However, the aircraft remains grounded, with the US Federal Aviation Administration yet to sign off on the software fix Boeing has completed and regulators in the US and beyond yet to agree a schedule for the aircraft’s return.

The division among regulators that accompanied the aircraft’s grounding – with China acting first and the US last – appears not to have been fixed.

European Aviation Safety Agency EASA is conducting its own investigation and it can be assumed China’s Civil Aviation Administration will decide for itself when to lift its ban.

Boeing chief executive Dennis Muilenburg was cautious in speaking with reporters ahead of the Paris Air Show.

He would not be drawn on the timing of a return, saying only: “We do anticipate it happening this year.”

US carriers American Airlines and Southwest Airlines, which are among the biggest operators of the MAX, have removed the aircraft from schedules until September.

They would need a green light from the FAA by the start of August to meet that deadline, and that seems unlikely.

Indeed, the FAA signalled this week that it could be December before the MAX returns.

A leading aviation analyst told Travel Weekly: “It is not going to be any earlier than December and it could be later.

“The FAA wants to get regulatory authorities aligned. [However] other regulators will take their own war.”

So the timing of aircraft’s return will not be solely safety driven but in part politically determined, with the US tariff-trade war with China a potential wild card in the process.

 

Certification timeline

In the meantime, an approximate timeline for the safety certification process is emerging.

A certification flight by FAA pilots is expected this month, with Boeing expected to submit full details on its MCAS update to the FAA in July.

The FAA would take several weeks to review this while Boeing finalises new training standards for the MCAS programme and the MAX.

Previously, the aircraft was certified for operation by pilots without simulator training. This is likely to be revised and would delay the MAX’s return given a severe shortage of simulators.

US pilot groups have said they support simulator training before flying the aircraft, having previously cast doubt on Boeing’s sharing of information on aspects of the MAX’s performance.

Only when the FAA has approved both the MCAS update and the training is it expected to issue an airworthiness certificate.

Then the issue will be the extent to which regulators wish to avoid a phased return around the world, which might add to public concerns about the safety of the aircraft.

A survey by business travel association GBTA at the start of June suggested there could be significant reluctance to fly on the MAX among corporate travellers – the single most important group of passengers.

If travellers were systematically to shun the aircraft for any period Boeing and its MAX would be in big trouble.

And that is before Boeing deals with compensation claims. The compensation Boeing makes to carriers will largely be discreet but will be eye-watering.

The cost of the grounding is put at $3 million per month per aircraft and there are almost 390 737 MAXs on the ground, with many more stacked up awaiting delayed delivery.

Yet the bigger issue will be Boeing’s liabilities towards the families of the 300-plus dead in the Lion Air and Ethiopian Airlines crashes.

Boeing faces a long haul to recovery.