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.


Russia vows cooperation with OPEC to keep oil market balanced

Updated 21 November 2019

Russia vows cooperation with OPEC to keep oil market balanced

  • Moscow not aiming to be world’s No.1 crude producer, Putin tells annual investment forum

MOSCOW: President Vladimir Putin said on Wednesday that Russia and the Organization of the Petroleum Exporting Countries (OPEC) have “a common goal” of keeping the oil market balanced and predictable, and Moscow will continue cooperation under the global supply curbs deal.

OPEC meets on Dec. 5 in Vienna, followed by talks with a group of other exporters, including Russia, known as OPEC+.

“Our (common with OPEC) goal is for the market to be balanced, acceptable for producers and consumers and the most important — and I want to underline this — predictable,” Putin told a forum on Wednesday.

In October, Russia cut its oil output to 11.23 million barrels per day (bpd) from 11.25 million bpd in September but it was still higher than a 11.17-11.18 million bpd cap set for Moscow under the existing global deal. Putin told the forum that Russia’s oil production was growing slightly despite the supply curbs deal but Moscow was not aiming to be the world’s No. 1 crude producer. Currently, the US is the world’s top oil producer.

“Russia has a serious impact on the global energy market but the most impact we achieve (is) when working along with other key producers,” he said. “There was a moment not that long ago when Russia was the world’s top oil producer — this is not our goal.”

Russia plans to produce between 556 million and 560 million tons of oil this year (11.17-11.25 million bpd), Energy Minister Alexander Novak said separately on Wednesday, depending on the volume of gas condensate produced during cold months.

Russia will aim to stick to its commitments under the deal in November, Novak told reporters.

Russia includes gas condensate — a side product also known as a “light oil” produced when companies extract natural gas — into its overall oil production statistics, which some other oil producing countries do not do.

As Russia is gradually increasing liquefied natural gas production (LNG), the share of gas condensate it is producing is also growing. Gas condensate now accounts for around 6 percent of Russian oil production.

Novak told reporters that in winter, Russia traditionally produces more gas condensate as it is launching new gas fields in the freezing temperatures.

“We believe that gas condensate should not be taken into account (of overall oil production statistics), as this is an absolutely different area related to gas production and gas supplies,” he said.

Three sources told Reuters on Tuesday that Russia is unlikely to agree to deepen cuts in oil output at a meeting with fellow exporters next month, but could commit to extend existing curbs to support Saudi Arabia.

On Wednesday, Novak declined to say that Russia’s position would be at upcoming OPEC+ meeting. Reuters uses a conversion rate of 7.33 barrels per ton of oil.