The shares of US manufacturer Boeing have shored up with the news of China Southern Airlines’ delivery outlook for Boeing 737 Max aircraft. China Southern Airlines (CSA) intends to receive 39 Boeing 737 Max jets in 2022 and 103 by the end of 2024, amounting to 142 units.
Although the carrier had forecasted last year to take delivery of 48 units in 2022, the recent low figure has indeed been encouraging for Boeing’s stock. Following the deadliest crash of China Eastern Airlines in March 2022, the aerospace giant faced concerns threatening to derail its efforts to emerge from the 737 Max safety crisis.
Boeing aircraft figure
China Southern Airlines is one of the largest operators of Boeing 737s in China, consisting of 26 Boeing 737-700, 163 Boeing 737-800, and 24 Boeing 737 Max 8. The delivery of 142 units by 2024 will bolster the Boeing 737 Max fleet to 166 aircraft.
As of February 28, Boeing’s report demonstrates 4137 unfilled Boeing 737 Max orders, of which China Southern has 34 737Max on order, and 724 aircraft orders belong to ‘unidentified customers.’
The willingness of China Southern Airline to get new Max aircraft indicates the likely return of the aircraft model to carrier’s schedules. It’s clear that it won’t add new planes just to keep them on the ground, pending the final stamp of the regulator’s approval.
Recertification of Boeing 737 Max by China
China was the first nation to ground Max aircraft in March 2019 and the last major market to give the green light to the aircraft to return to airline schedules after more than two years. In December 2021, China’s aviation regulator- the Civil Aviation Administration of China (CAAC), rescinded its grounding orders of Boeing 737 Max in the country by issuing an airworthiness directive and ordered airlines to conduct sufficient assessments, including software upgrades, additional pilot training, and revisions to operational manuals before resuming the passenger flights. After Boeing made significant modifications to the flight control system, CAAC set the stage for the return of Max aircraft and approved its commercial operation.
In the first month of 2022, China Southern Airlines conducted the 737 Max test flight by taking off and landing at Guangzhou Baiyun International Airport; the first test flight since the grounding of the aircraft type in March 2019. Gearing up for the American aviation titan’s comeback, the Chinese carrier completed the test flight.
Why did China ground Boeing 737Max?
The two deadly crashes involving Boeing 737 Max aircraft, i.e., Lion Air Flight 610 and Ethiopian Airlines Flight 302, resulted in 346 fatalities altogether. Plagued with serious flight control problems, the Boeing 737 Max aircraft faced the longest grounding ever in the history of US airliners over perceived safety risks.
The evidence of similarity shared by two Boeing 737 planes involved in two accidents caused China’s aviation regulator to ground 97 Boeing Max planes flying in the country. In line with the principle of zero tolerance of safety hazards, CAAC took a harsh move to ban the entire fleet, affecting Boeing’s reputation and shares.
How much China’s Max approval means to Boeing?
With China being a major market and Boeing competing for market share there, the approval of China to return the Max represents an important milestone for Boeing Company towards safely returning the 737 Max to service in China. As Chinese operators are among the largest Boeing aircraft operators, they make up much of the revenue for the US aerospace giant.
Despite several other strong headwinds faced by Boeing, including restoration of 787 Dreamliner deliveries, beefing up of its order book following cancelation from COVID-19 aviation downturn, and skyrocketing prices, CAAC’s action has unlocked Boeing’s access to a really critical market and cleared the way to resume the unfilled delivery orders.
When will Max return to service in China?
Although China issued the airworthiness directive for Boeing 737Max in December, airlines haven’t returned the aircraft to service yet. The country’s zero-Covid approach has created barriers to the normalization of air travel demand delaying the reentry of Max aircraft in China.
The relaxation of the strict zero-COVID strategy and rejuvenation of international travel may expedite the return of Boeing Max aircraft to China, resulting in a strong financial position. Nonetheless, the news from China Southern Airlines has resulted in a positive stock update and given investors an important hint that Max’s return is still in the cards this year.