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AVN Spotlights The Safety Woes of the B737 MAX 9

January 13, 2024

I’m John Persinos, editor-in-chief of Aircraft Value News. Welcome to my latest video presentation. The accompanying article is a condensed transcript. For additional details and several charts, watch my video.

An incident on January 5 unfolded as a Boeing 737 MAX 9, operated by Alaska Airlines, experienced a midair mishap with a fuselage panel (aka “door plug”) that’s designed to serve as a potential additional exit.

Shortly after take-off from Portland, Oregon, en route to Ontario airport on the outskirts of Los Angeles, the door plug was unexpectedly torn off. Fortunately, the skilled response of the flight crew led to a successful emergency landing, avoiding any casualties.

In the aftermath, both Alaska Airlines and United Airlines, boasting the world’s largest fleet of this aircraft model, disclosed the discovery of loose bolts on several of their Boeing 737 MAX 9 planes.

Responding to these developments, the U.S. Federal Aviation Administration (FAA) issued an “Emergency Airworthiness Directive” on January 6 for all owners and operators of 737 MAX 9 aircraft.

On January 11, the FAA announced that it had started an investigation into whether Boeing neglected to ensure the MAX 9 was manufactured to match the design approved by the agency.

The National Transportation Safety Board (NTSB) is investigating why the MAX 9 door plug few off the jet. The NTSB is trying to determine whether bolts that would have kept the plug in place were missing or installed incorrectly.

Boeing and its lessors can take comfort in a recent statement by Fitch Ratings that these highly publicized problems are so far “neutral” for rated aircraft lessors. It’s significant that the door plug was manufactured by a vendor, so it isn’t yet clear exactly where the fault lies.

Collectively, Fitch-rated lessors’ exposure to the MAX 9 aircraft totaled 1.2% (or 57 aircraft) by count and 1.5% (or US $2.7 billion by market value) as of January 8, 2024. Of this exposure, the FAA’s airworthiness directive applied to only 47 of these aircraft, or $2.2 billion by market value.

In a statement released January 9, Fitch Ratings asserted:

“The grounding of the Boeing 737 MAX 9 is expected to be neutral to ratings and have limited near-term effects on Fitch-rated aircraft lessors, airlines and ABS, given relatively low exposure to the aircraft model and a fairly clear pathway for corrective action.

“The airworthiness directive applies only to the Boeing 737 MAX 9 aircraft with the mid-cabin door plug for configurations with fewer than 180 seats. No other Boeing 737 MAX type or current generation B737-900 aircraft is subject to the grounding. The groundings will contribute to the overall scarcity of aircraft supply, further supporting residual values on current technology aircraft already buoyed by delivery delays from Boeing.”

Fitch went on to assert:

“Early information indicates that the grounding may be relatively short-lived, and both United and Alaska have sufficient financial flexibility to weather the disruption. The grounding also comes at a low point in the year for travel. A longer-term grounding would complicate operations, but also likely entail greater compensation from Boeing.”

Problems to the MAX

The revelation of the MAX 9’s technical woes add to a series of challenges faced by the American manufacturer, Boeing. Notably, the incidents in Indonesia and Ethiopia in October 2018 and March 2019, respectively, resulted in nearly 350 casualties due to a malfunctioning inflight stabilization system. It’s crucial to highlight that those accidents involved the Boeing 737 MAX 8 variant. The MAX 9 is a longer, newer version of the MAX 8.

In the aviation landscape, the Boeing 737 MAX 9 is currently operated by not only Alaska and United but also by seven other airlines, totaling over 200 active aircraft as of January 2024, as reported by the travel industry news site, Skift.

Boeing management has publicly expressed regret over the impact on customers and passengers, emphasizing safety as their top priority. They concurred with and fully supported the FAA’s decision, endorsing immediate inspections for 737-9 airplanes with the same configuration as the affected aircraft.

Considering the unfolding technical issues, there is a looming concern about how these incidents might affect the lease rates and base values of MAX 9 aircraft across the aviation industry. The repercussions of these challenges are likely to influence the financial considerations associated with leasing and valuing these planes, posing significant consequences for the aviation market as a whole.

As of now, though, the expected damage to MAX 9 lease rates and base values appears to be, as Fitch noted, neutral. The consensus of analysts is that this neutral assessment carries over onto the MAX 8 as well.

I will continue to monitor these developments as they pertain to the needs and interests of the subscribers to Aircraft Value News.

Questions or comments? Drop me a line: [email protected].



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