Airlines scramble to secure simulators for when 737 Max finally returns

Airlines are scrambling to book time in 737 Max training facilities as far afield as Fiji, Iceland, and Panama, operators said, after Boeing recommended pilots be trained in one of the few simulators replicating the latest model.

That means thousands of pilots from more than 54 airlines need to squeeze into about three dozen 737 Max simulators around the world before they can fly the plane.

“Boeing is recommending that all 737 Max pilots undergo training in a 737 MAX simulator prior to flying the aircraft in commercial service,” the company said, the first confirmation of its new policy.

The 737 Max has been grounded since March 2019 after two fatal crashes and cannot return to service until regulators approve software changes and training plans. Boeing’s bill for the grounding could balloon to more than $25bn (€22.5bn), analysts estimated, a day after the US planemaker warned of further delay in returning its once best-selling jet to service.

The company has already booked $9bn in costs related to the grounding, including $5.6bn as compensation for airline customers and $3.6bn in charges to cover additional production costs.

Jefferies analyst Sheila Kahyaoglu said Boeing may now need to boost its compensation package for customers by another $10bn and revise its cost estimate related to the 737 Max’s production by an additional $5.4bn.

“Our estimates assume 737 Max deliveries restart in Q3 2020,” Ms Kahyaoglu said, lowering the brokerage’s price target on the shares.

Boeing said it did not expect to win approval for the return of the 737 Max to service until mid-year due to further potential developments in the certification process and regulatory scrutiny on its flight control system.

But the shortage of simulators for pilots is a further problem. The estimated 34 737 Max simulators in service, produced separately by CAE and Textron’s simulator and training division TRU, are less than a quarter of the number of older 737 NG simulators certified by US and European regulators.

“I think that what a shortage of simulators will mean is the fleet of Maxes will start flying more slowly than what the airlines would like,” said Gudmundur Orn Gunnarsson, managing director of TRU Flight Training Iceland, a joint venture between Icelandair and Textron’s simulator and training division.

“In the beginning it was said that simulator training would not be needed,” he said.

“This changes it totally.”

Mr Gunnarsson said TRU Flight Training Iceland had more inquiries than usual from potential airline customers about the use of its 737 Max simulator since Boeing’s January 7 announcement.

Many airlines did not order 737 Max simulators, assuming they could rely on the older 737 NG simulators because the types were so similar. Simulators can cost between €9m and €18m each, with the 737 Max at the upper end, CAE said. Hourly rates for simulator training can cost €450 and €900, it said.

High demand for 737 Max simulators has led the Montreal-company and its rival TRU to produce simulators for customers they have yet to line up.

“Customers are making increasing inquiries from all over the globe,” a TRU spokeswoman said.

Added to the delay, weak Chinese demand for its widebody 787 Dreamliners as well as production problems with its new 777X jetliner have also made investors jittery.

“We are expecting Boeing’s up-coming results to be an absolute disaster, and that looks guaranteed,” Robert Stallard at Vertical Research said.

-Reuters