The grounding of the 737 MAX worldwide is pretty much complete. It happened in stages, with China, Ethiopia and Indonesia first making the decision to ground Boeing’s newest plane (SEE: Following yesterday’s crash, some airlines are grounding the 737 MAX). Rapidly, other countries and aviation agencies followed suit, spurred by public outcry against the new aircraft and a lack of confidence in its airworthiness. The U.S. held out the longest, only grounding the 737 MAX aircraft on Wednesday (SEE: President grounds all 737 MAX 8 and MAX 9 aircraft).
Now one airline is asking Boeing to foot the cost.
Norwegian is in dire straights without the MAX
Financially troubled Norwegian Airlines (SEE: Is this the end of Norwegian?) is asking Boeing to bear the cost of their planes’ grounding. A company statement posits, “it is obvious that the costs incurred by the temporary grounding of brand new aircraft should be covered by those who have made the airplane”, reported by Bloomberg News. Norwegian has not named a sum, but it is estimated a daily cost of 5 to 15 million kroner ($580,000 to $1.8 million) to the airline.
As Norwegian is in rough financial shape and relies on the 737 MAX narrow-body to ferry passengers across the North Atlantic between western Europe and the U.S. northeast for budget prices, the planes’ grounding is going to impact their operations more than most. Large carriers like Southwest and American Airlines will be able to bear the financial burden with ease as other aircraft are found to replace those unable to be used. But Norwegian is going to have a rough time of it. Even if they are able to lease aircraft, they may be the wrong size for the route and be far undersold, and they may also be very inefficient. Norwegian once used HiFly’s Airbus A380 to replace their 787 Dreamliner service, which undoubtedly burnt a whole lot more fuel.
Norwegian is faced with difficulties on all sides. They have European Union EU261 regulations staring them down in the event their passengers are delayed (not sure how the 737 MAX situation is handled under this law), they are out of cash, and they are now unable to operate their most fuel efficient and most profitable planes.
I’m worried for Norwegian. If Boeing doesn’t step up and meet their demand, this may be the straw that breaks the camels back.