“It’s not great, but I don’t think it’s that bad for Max, despite Covid and everything else,” said Sheila Kahyaoglu, defense and aerospace analyst at Jefferies, an investment bank.
It may seem wrong for an airline in the midst of a major crisis to buy a tarnished plane that costs tens of millions of dollars, but experts say there is a good reason why many companies like Southwest Airlines and American Airlines will stick with the Max. The aircraft can offer substantial fuel and maintenance savings that are even more valuable in times of shortage. Other airlines may have difficulty moving away from orders they have already placed, and they will reluctantly make purchases.
A new aircraft can last a generation, and the efficiency of the Max is very important because fuel can account for about a fifth of an airline’s operating costs. Boeing says the plane uses at least 14 percent less jet fuel than its predecessors. That could lead to double-digit increases in airline earnings, said Vitaly Guzhva, a professor of aviation finance at Embry Riddle Aeronautical University. “There is still a pretty strong business case for the Max.”
Southwest, for example, has about 750 aircraft in its fleet, each a version of the 737. If it could have replaced part of its fleet last year with the more than 275 Max aircraft it hopes to own, Southwest could have saved more than $ 230 million in fuel costs, according to Dr. Guzhva’s mathematics. Boeing says the plane offers fuel savings of more than $ 10 million over its 25-30 year life.
Airlines can also point to fuel savings as an indication of their environmental stewardship for customers who are increasingly aware of the contribution of air travel to climate change. Others may simply want to apply the money saved to reduce the price of tickets to attract business.
The aircraft could also generate huge maintenance savings. New aircraft often come with warranties, and expensive engine overhauls are generally needed a few years after that end, said Robert Spingarn, defense and aerospace analyst at Credit Suisse. If the timing is right, an airline may choose to replace an aircraft that needs major repair with a Max.
“When you have a new plane, you don’t have to think about that kind of expense,” Spingarn said. “There will be some who say, ‘I stick with the Max because math works better for me than not taking it.'”
