In a world of mounting backorders in which demand far outstrips supply, disgruntled Boeing 737 MAX customers cannot just take their business elsewhere. Not if they wish to enjoy any semblance of timely delivery.
There are likely escape clause provisions in most of Boeing’s 737 MAX contracts that would allow big customers like Norweigan or WestJet to back out under the circumstances. But where then would they go? While Airbus would be welcome their business with open arms, it would come with a caveat: wait in line…it’s going to take some time. Oh, there would certainly be some preferential treatment and line cutting for key customers, but Airbus is simply unable to solve short-term needs if airlines find themselves unable to operate the 737 MAX or opt to shift away future deliveries from that troubled program.
As the Financial Times puts it, the backlog is real:
Boeing’s arch-rival Airbus, which could typically be a beneficiary of the Boeing crisis, is already working flat-out to produce enough of the fuel-efficient jets just to deliver on its existing backlog of orders. At the end of February the company had an order backlog of 5,962 for its single-aisle aircraft. Meanwhile, Boeing has a backorder of 4,659 737 MAX aircraft.
Airbus, of course, recognizes this and has taken steps to hire more workers. By year’s end, Airbus hopes to produce 63 narrowbody jets per month (up from the current 60). But it cannot go much further beyond that due to the complex supply chain involved in making the final assembly possible.
An Alternate Option: Lease Older 737s
Since Airbus will not be a great help, another solution may lie in purchasing older variants of the 737. While not as fuel-efficient as the 737 MAX, these older aircraft do not suffer from the same (real or perceived) technical problems and may serve as a stop gap if the 737 MAX program is delayed longer than expected. While that would mess up Boeing’s strategic planning and cause a ripple effect to its supply lines, it would not have to shut down assembly lines even if the 737 MAX requires extensive re-tooling.
When I worked for Star Alliance, my primary role was part of the negotiation team for a joint economy class seat acquisition project. Even those discussions with seat manufacturers were prolonged and expensive. Imagine how much more complex aircraft orders are.
At least when it comes to the 737 MAX, Boeing has one thing going for it: most customers do not have a viable alternative.