American Airlines [NYSE: AAL]said it expects to begin phasing in the Boeing 737 MAX into service by mid-January, nearly nine months after aviation authorities grounded the plane for safety reasons.
The Dallas-based airline said in a statement Oct. 9 that the Federal Aviation Administration will likely recertify the aircraft later this year and that it will then begin preparations to integrate it into American’s fleet. Some aviation industry officials, including those at Boeing, have suggested FAA approval could come in the first half of November.
In a simultaneous investor update, American also said it expects third quarter cargo revenue of $208 million, down from its guidance of $220 million. The entire airline sector has seen air cargo business lose altitude this year, as highlighted by the International Air Transport Association on Wednesday.
The company posted $221 million in cargo revenue during the second quarter, a drop of 15.4% from the year-prior period. For the first half of the year, cargo revenue fell 10% to $439 million. American had $260 million in cargo revenue, up 16% from the same 2017 period, in the third quarter of last year.
American is now canceling flights on the 737 MAX through Jan. 15 and substituting other aircraft types to accommodate most passengers who have booked seats. It previously dropped the MAX from its schedule through Dec. 3. Beginning Jan. 16, it will slowly increase flying on the 737 MAX, it said.
American has 24 737 MAX planes in storage and another 76 that are scheduled for delivery, including 16 by the end of the year before Boeing cut off deliveries. The airline cancelled 9,475 flights in the third quarter and estimates the dropped flights will impact pre-tax income by about $140 million, it said in a simultaneous investor update.
The MAX has been sidelined since March after two crashes killed 346 people. Boeing says it has made changes to its flight-control software that automatically pushed the nose of the planes’ down in response to erroneous signals of a possible stall during takeoff.
Once the FAA gives the green light to return to service, airlines say they need at least a month or two to bring stored planes to working order, train pilots on the new software and slot the MAX back into their schedules. And global authorities could take longer to approve Boeing’s fixes.
Last week, officials with the Southwest Airlines Pilots Association indicated at their annual meeting that it would take until February or March for their airline to resume flying the MAX, according to the Associated Press. SWAPA is estimating a return to service date sometime in the first quarter, spokeswoman Amy Robinson, said in an email to FreightWaves.
Southwest, the biggest operator of the MAX, has pulled the plane from its schedule through Jan. 5, but union officials say that target appears ambitious.
Ahead of its earnings release later this month, American said that despite the negative impact to revenue from Hurricane Dorian, it expects third quarter total revenue per available seat mile to increase about 1.5 to 2.5% year-over-year, adjusted from previous guidance of 1 to 3%.
American said it expects third quarter costs per passenger seat to increase 4 to 6%, year-over-year, excluding fuel and special items.
It will take a mostly non-cash, pre-tax charge of $280 million related to the retirement of the company’s Embraer E190 fleet, as well as for fleet restructuring costs, merger integration and financial expenses.
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