190312 Boeing 737 Max 8
File photo: A ground crew walks near a Boeing 737 Max 8 plane operated by Shanghai Airlines parked on the tarmac at Hongqiao airport in Shanghai, China, Tuesday, March 12, 2019. Image Credit: AFP

Seattle: The extended grounding of Boeing Co.’s 737 Max plane forced Ryanair Holdings Plc to scale back growth plans for next summer, putting the airline industry on notice that the crisis is starting to affect longer-term plans.

With a return date for the Max still uncertain after two fatal crashes, Ryanair is likely to receive barely half of the 58 planes it was expecting for the 2020 peak schedule, the Irish company said, estimating that the reduction will wipe 5 million passengers from its full-year tally.

“Boeing is hoping that a certification package will be submitted to regulators by September with a return to service shortly thereafter,” CEO Michael O’Leary said in a statement. “We believe it would be prudent to plan for that date to slip by some months, possibly as late as December.”

Ryanair’s announcement shows how a further extension to the Max grounding would have significant fallout for airlines, which draw up schedules about six months in advance. Air travel is particularly weighted toward the summer season in Europe, with passenger numbers typically surging from the Easter holiday, which starts on April 10 next year.

Impact forecasts

While US-based operators of the Max haven’t yet talked about changing their growth plans beyond this year or readjusted deliveries, it will probably take 15 to 18 months for the carriers to catch up to their original schedules, said Savanthi Syth, a Raymond James Financial Inc. analyst.

The timing depends on Boeing resuming its original delivery schedule, after slowing Max production rates to 42 from 57 aircraft a month, Syth said.

Time for prudent supply additions

Carriers will probably limit the expansion of the seat supply until late next year, said Helane Becker, an analyst at Cowen & Co. “We think capacity growth will remain muted until the end of 2020 so that the first “normal” year for capacity growth will be 2021,” she said in a note to clients.

Ryanair, Europe’s biggest discount airline, faces a particular issue because it has ordered the high-capacity Max 200 version of the 737, which requires separate certification from US and European regulators. Approval for flights could take up to two months beyond the baseline model’s return to service, it said.

Other Max customers are already beginning to look at fleet moves for next year in case the grounding drags on. TUI AG, the world’s biggest travel company, wants the model to replace existing 737s and at some point will need to decide whether to keep the older aircraft in service, a spokesman said.

Norwegian Air Shuttle ASA has the greatest current exposure in Europe to the Max crisis, with 18 planes grounded, but agreed in April to postpone the handover of 14 more due in 2020 and 2021 and keep older planes for longer as it reins in capacity as part of a plan to resolve a debt crisis.

US carriers

In the US, American Airlines Group Inc. and United Airlines Holdings Inc. last week pulled the narrow-body off their schedules through early November, in the latest sign the jet may not resume commercial service this year. Southwest Airlines Co., the largest operator, has taken the Max out of its schedules at least through October 1.