Boeing has got a bigger than MAX problem

Boeing finally has a silver lining. Europe’s top aviation regulator told Bloomberg in an interview published on Friday that the airplane producer’s troubled 737 MAX is safe to fly by the end of the year. That sent shares of the $92 billion company up 5% before falling back somewhat. It’s a step towards putting its MAX woes in the past. And then there are other problems to worry about.

Boeing’s challenges started in March 2019 when the MAX was grounded after two fatal crashes. The company started the long and arduous process of fixing up the MAX’s problems so that it could again pass regulatory muster. Last month U.S. Federal Aviation Administration chief Steve Dickson conducted a flight evaluation and said that he liked what he saw. But he didn’t give any firm sense of when the review process would be completed.

Europe’s regulator Patrick Ky was slightly more definitive, telling Bloomberg that flights would be ready to go before the end of the year, despite that some other upgrades need more time. That’s a solid step. The trouble is the MAX is now hardly Boeing’s biggest problem.

Customers canceled three MAX orders in September, and Boeing received zero new ones, the company’s data showed this week. The pandemic has stricken airline companies, who are cutting back routes and shutting down old aircraft rather than bulking them up. Delta Air Lines said earlier this week that it will retire 200 aircraft this year and 400 by 2025. Meanwhile, Boeing delivered only 11 planes in the month of September, less than half from the same month a year ago. The company delivered 98 planes in the first nine months of the year, down from 301 in the same period a year ago. That matters because customers pay a large chunk of an airplane’s price on delivery.

It’s possible that after the Covid-19 crisis, demand for Boeing jets comes soaring back. One reason Delta and others are retiring aircraft is because they are old. With fewer passengers traveling, they have no need to replace them. Air travel will return eventually, and some of those planes will need to be replaced with more fuel-efficient models. But it’s possible that air travel – in particular business travel – won’t ever return to pre-pandemic levels. And Boeing’s best days, with or without the MAX, may be behind it.