Southwest and American 737 MAX flights grounded until March

Southwest Airlines, which has bet its entire growth strategy on Boeing’s newest single-aisle aircraft, had previously canceled all its 737 MAX flights until Feb. 8. (Reuters)
Updated 09 November 2019

Southwest and American 737 MAX flights grounded until March

  • Southwest and American, the two largest US operators of the aircraft, have had to scale back growth plans and are together canceling more than 300 flights a day
  • Southwest has bet its entire growth strategy on Boeing’s newest single-aisle aircraft

CHICAGO/WASHINGTON: Southwest Airlines and American Airlines said on Friday they are extending Boeing 737 MAX cancelations until early March, just shy of the one-year anniversary of an Ethiopian Airlines crash of the jet that led to a worldwide grounding.
Southwest and American, the two largest US operators of the aircraft, have had to scale back growth plans and are together canceling more than 300 flights a day, taking a hit to profits as they manage slimmer fleets without the 737 MAX.
Southwest, which has bet its entire growth strategy on Boeing’s newest single-aisle aircraft, had previously canceled all its 737 MAX flights until Feb. 8 and now expects a return to service on March 6, though it warned that the timeline could get pushed back again.
Boeing Co. is facing increasing hurdles in obtaining approval to return the plane to service before the end of this year as it has targeted.
American said it planned to resume commercial flights on the 737 MAX on March 5, and expects to run test flights for American team members and invited guests before that date, once the aircraft is certified.
United Airlines, the other US 737 MAX operator, had thus far canceled flights into January, although it may yet have to extend that time frame.
Reuters reported this week that US and European regulators will need to return to a Rockwell Collins facility in Iowa to complete an audit of Boeing’s software documentation after regulators found gaps and substandard documents. Boeing has confirmed it must submit revised documentation.
That has thrown into question when Boeing would be able to complete a certification test flight. The Federal Aviation Administration has said it would not unground the planes until 30 days after that flight occurs.
The 737 MAX, Boeing’s best-selling plane, has been grounded since March after crashes in Indonesia and Ethiopia killed 346 people.
Two US officials told Reuters it is extremely unlikely — if not impossible — that Boeing will be able to win approval to return flights to service before the end of December.
Just two days ago, American Chief Executive Doug Parker said he was hopeful that the aircraft would “get certified in the near future.”
American has estimated that the 737 MAX grounding has cut 2019 earnings by $540 million, while Southwest estimated the total hit to its earnings between January and September at $435 million.
That toll will only rise the longer the MAX remains parked. Boeing is discussing compensation with airlines but no agreement has been reached.
Southwest had 34 MAX jets at the time of the March 13 grounding and was expecting delivery of another 41 jets this year. It said on Friday it still hopes to receive seven MAX deliveries in the current quarter, with the remaining shifting into 2020.
But without clarity on the MAX timeline, Southwest said it could not update a previous forecast for first-quarter capacity to grow between 2 percent and 3 percent.


Alibaba confirms huge Hong Kong public listing worth at least $13bn

Updated 3 min 32 sec ago

Alibaba confirms huge Hong Kong public listing worth at least $13bn

  • Over-allocation options could take the total value to more than $13 billion, making it one of the biggest IPOs in Hong Kong for a decade
  • Alibaba Chief Executive Officer said the group wanted to participate in Hong Kong’s future

HONG KONG: Chinese technology giant Alibaba on Friday confirmed plans to list in Hong Kong in what it called a $13 billion vote of confidence in the turbulent city’s markets and a step forward in its plans to go global.
The enormous IPO, which Hong Kong had lobbied for, will come as a boost for authorities wrestling with pro-democracy protests that have tarnished the financial hub’s image for order and security and hammered its stock market.
Alibaba will offer 500 million shares at a maximum of HK$188 apiece to retail investors, the company said. The number eight is considered auspicious in China.
Over-allocation options could take the total value to more than $13 billion, making it one of the biggest IPOs in Hong Kong for a decade after insurance giant AIA raised $20.5 billion in 2010.
Alibaba had planned to list in the summer but called it off owing to the city’s long-running pro-democracy protests and the China-US trade war. The US and China are now working on sealing a partial trade deal.
Daniel Zhang, Alibaba Chief Executive Officer, said the group wanted to “contribute, in our small way, and participate in the future of Hong Kong.”
“During this time of ongoing change, we continue to believe that the future of Hong Kong remains bright,” he said.
The firm’s shares are already traded in New York. A second listing in Hong Kong is expected to curry favor with Beijing, which has sought to encourage its current and future big tech firms to list nearer to home after the loss of companies such as Baidu to Wall Street.
In the statement, Zhang said that when Alibaba went public in 2014 it “missed out on Hong Kong with regret.”
Mainland authorities have also stepped up moves to attract such listings, including launching a new technology board in Shanghai in July.
The listing comes after the city’s exchange tweaked the rules to allow double listings, while Chief Executive Carrie Lam had also been pushing Alibaba’s billionaire founder Jack Ma to sell shares in the city.
“The listing in Hong Kong will allow more of the company’s users and stakeholders in the Alibaba digital economy across Asia to invest and participate in Alibaba’s growth,” the company said.
It has long been expected to launch a multibillion-dollar stock listing in Hong Kong but appeared to postpone the offering because of political and economic turmoil.
Hong Kong’s key Hang Seng Index rose 0.48 percent in morning trading following the announcement
Chinese shoppers set new records for spending on Monday’s annual 24-hour “Singles’ Day” buying spree, despite an economic slowdown in the country and the worries over the US trade war.
It said consumers spent $38.3 billion on its platforms over that stretch, up 26 percent from the previous all-time high mark set last year.
Alibaba also said it saw record amounts of cross-border sales, underlining its plans to expand globally.
“Globalization is the future of Alibaba Group. We firmly believe the marriage of digital technology and commerce will bring about unprecedented change that will not be limited by borders,” Zhang said.