The 21-month grounding of Boeing 737 MAX in-service jets has necessarily impacted the air transport industry, but will it affect the commercial aviation MRO business in years to come? Chris Kjelgaard investigates.

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Some 380 Boeing 737 MAX aircraft delivered before the type’s March 2019 grounding are gradually re-entering service, while 400-plus new-build MAX planes built during the grounding but not yet delivered are finding operational homes – whether with their original customers or with different ones. As they do, industry opinion varies as to whether 737 MAX MRO will be affected in the future.

Just as important is the closely related question of whether the 737 MAX grounding will affect the MRO industry more generally in future years – particularly when its effects on the air transport business are considered in tandem with the effects the Covid-19 pandemic has had on the commercial aviation sector globally.

Two schools of thought exist on the extent of the effect the 737 MAX grounding will have directly on future MRO capacity for the type, and also for future MRO capacity generally. One view, argued compellingly by Phil Seymour, CEO of aviation technical consulting firm IBA Group, holds that deferrals of calendar-dependent MRO items granted to operators of previously in-service 737 MAXs by the FAA and EASA during the grounding will mean “a lot of catching-up of deferred items” in the next few years.

At the same time, deliveries over the next two to three years of the 400-plus new 737 MAXs rolled out by Boeing during the grounding but immediately stored, as well as additional new-production 737 MAXs now being built as the assembly lines get back under way after Boeing stopped production, will see hundreds more aircraft beginning their maintenance-flow schedules. While the maintenance burden on these new aircraft should be light during their first several years of operation – very largely they will just require overnight line maintenance – nevertheless the clock starts ticking on each aircraft’s calendar-determined maintenance requirements as soon as it is delivered, Seymour notes.

“So now a wave of time-expired checks [on previously delivered 737 MAXs] needs to be done, and it accelerates the next wave of checks as well for the structural-inspection programme and the corrosion-prevention programme,” which begin at year six, he says. So bunching of 737 MAX MRO checks is likely to happen in a few years, potentially causing an MRO capacity shortage for the 737 MAX – particularly in areas such as the Indian sub-continent, where not enough capacity exists today, says Seymour.

However, Paul Dolan, president and COO of Aviation Technical Services (ATS), which is headquartered in Paine Field, Everett, USA and a major provider of airframe MRO for a variety of Boeing 737NG and 737 MAX customers, argues equally compellingly for a second school of thought which holds that the grounding “may not be as much of an issue as some think” for future 737 MAX MRO capacity.

First, Dolan notes, some, if not many, of the 737 MAXs in service before the general grounding were already established on maintenance-flow schedules and already had received some of their required calendar-determined work by the time the grounding began.

Additionally, in some or many cases during the grounding, “airlines managed to get workscopes done” on the calendar-determined maintenance items their 737 MAXs required, says Dolan. ATS has been assisting its 737 MAX MRO customers and Boeing with the remedial work required to get stored aircraft back into service and any need to complete maintenance items deferred during the grounding is “not necessarily what we’re seeing”. Most 737 MAXs previously in service will return to service fairly quickly, probably this year.

Dolan agrees with Seymour that it will take two to three years for the market to absorb the new 737 MAXs that Boeing rolled out during the grounding but didn’t deliver. However, he thinks there are several reasons why deliveries of those aircraft, on the heels of re-deliveries of the 737 MAXs previously in service, won’t lead to a bunching of calendar-dependent MRO tasks – and the consequent possibility of 737 MAX MRO under-capacity developing – in six years’ time.

According to Dolan, deliveries of the 400-plus new aircraft rolled out during the grounding will be “phased in” with deliveries of the newly assembled 737 MAXs which will soon be coming off Boeing’s re-activated assembly lines, creating “almost a normal delivery schedule”. This is because, in many cases, Boeing won’t be able to deliver the new aircraft it rolled out during the grounding as soon as it would otherwise like for the health of its cash-flow.

In some cases, customers have deferred delivery until later dates as a result of the devastating effects of the Covid-19 pandemic on the air transport industry globally. In other cases, customers either cancelled their orders during the grounding – taking advantage of clauses which allowed penalty-free cancellation if Boeing delayed delivery more than a year – or went bust, and Boeing now has to find new customers for those 737 MAXs. Boeing (or its lessor customers) will need to negotiate new purchase or lease deals on the aircraft and their new operators will need in turn to negotiate support agreements for the jets with MRO facilities, ground-handling companies and other vendors. 

Additionally, Dolan says, many re-homed 737 MAXs will need to be reconfigured and/or repainted. Galleys may need moving and seats replaced. Other equipment changes might be required, depending on the new operator’s needs. The bottom line for 737 MAX MRO capacity, says Dolan, is “there’s a long way before we see a bow wave – it’s going to be quite some time before relatively heavy maintenance” is required on those aircraft.

LEAP-1B engine MRO capacity

Of course, no Boeing 737 MAX can fly without its engines – the CFM LEAP‑1B being the sole-source engine for the aircraft type. So future LEAP-1B engine MRO capacity is just as important for the overall 737 MAX MRO-capacity landscape as is the airframe MRO capacity available. However, CFM International believes the situation is well under control, both as regards initial rehabilitation (from de-preservation) and re-activation of the engines of the 800‑plus stored aircraft and – in the longer term – for there not being a squeeze in several years’ time on LEAP‑1B shop visits for replacement of life-limited parts and overhaul.

“De-preservation and re-activation of the engine has more to do with a coordinated effort between the aircraft manufacturer, the engine OEM and the airlines. The process involves very focused training and information sharing, which has successfully happened during the preparation phase,” says Alan Kelly, general manager of CFM Services, the global repair network for the LEAP engine.

“Today, the mission-based, cross-company teams are out making it happen, and they are doing an amazing job. The overall efforts of the fleet preservation process began immediately once the aircraft were taken offline. It’s a detailed process that requires a rigorous check-list approach and testing, all tightly planned with a proactive forward look towards re-entry into service.”

In the longer term, Kelly says CFM does not anticipate a bottleneck or bunching problem on shop visits, “primarily because our strategic maintenance support of the LEAP-1B programme has been well established since the entry into service, and thus we have done the heavy lifting in terms of preparedness”. He adds: “We remain focused on our mission, which is to ensure our own shops are ready, and that we’re facilitating readiness for MRO network shops as they come online to support the programme.”

Similarly, CFM is not anticipating any “under-capacity” for LEAP-1B MRO in future years. “In addition to our owned shops being ready and prepared, we’ll be delivering on our commitments to the MRO network worldwide. We’ll have capacity in owned shops, and there could be new MRO shops coming online in the near future depending on the market and customer demand.”

The wider picture

Whatever happens to 737 MAX MRO, the grounding could eventually produce under-capacity elsewhere in the MRO industry, says Seymour, particularly when its longer-term effects on air transport are looked at together with those resulting from the Covid-19 pandemic.

Seymour thinks that one factor which has been significantly under-estimated in most forecasts’ assumptions of required MRO capacity in the wake of the 737 MAX grounding is that many airlines have needed to operate fleets of older aircraft such as Boeing 737NGs – many of them leased – for much longer than planned, because their new replacement jets were unavailable.

An immediate consequence of this was that many carriers had to have MRO performed on aircraft they had expected to be able to return to lessors when they received their new 737 MAXs, according to Seymour. This created unexpected and high levels of expense for them, just before the pandemic struck at the end of 2019. He says some carriers have included these costs in their negotiations with Boeing over compensation for late delivery of their 737 MAXs.

But more important for the MRO business is that “an area being missed by everybody” in estimating requirements for MRO capacity “is aircraft on operating lease, and the work required to get them into redelivery condition”.

The effects of longer-than-expected lease terms – with the associated added costs of lease extensions agreed at short notice – have been compounded by airlines’ sudden desires during the pandemic to return aircraft to lessors early, and in many cases the carriers’ inability to continue paying monthly rentals on their leased aircraft. This has often led to lessors unilaterally extending airlines’ leases by six months or more, simply because throughout much of 2020 the lessors weren’t receiving rentals from the lessees, according to Seymour.

In IBA Group’s estimation, the most important consequence of the combined 737 MAX grounding-plus-pandemic-onset for the lessors, and also for the MRO business, is that this year the lessors will see double the number of aircraft returned from lease that they usually do. Normally, lessees return about 1,000 single-aisle jets and 200 widebodies to lessors each year, says Seymour. This year, IBA Group expects more than 1,000 additional aircraft to be returned early.

According to Seymour, this is hugely important for MRO industry capacity, because many aircraft leases and redeliveries to new customers are timed to take place in a cycle corresponding to the years in which the six-year and 12‑year heavy calendar checks required by airworthiness regulations are scheduled to be performed. However, the return-and-redelivery checks required by lessors “usually go way beyond what is required from the airworthiness perspective”, and so these checks make major demands on overall MRO-industry capacity.

A year in which twice as many aircraft as usual are likely to be returned “will cause a massive surge in demand”, says Seymour; MROs “are going to be inundated”. At the same time, however, reacting to the sudden drop in airline flying in 2020 and the general economic decline wrought by the pandemic, many MRO facilities have been laying off staff and cutting back their operations.

Although ATS has been training its staff intensively on 737 MAX MRO to prepare for the forthcoming major requirement for the work, Dolan thinks the pandemic could well induce an industry-wide MRO capacity shortage in the future. Globally, aviation was already beginning to feel the effects of an industry-wide shortage of trained and skilled personnel in all areas of the fast-expanding industry before the pandemic began. While the pandemic reduced aviation’s manpower demand in the short term, in the longer term the need will return – and in many cases MRO facilities, having recently trimmed their costs, may find themselves short.

As a result, ATS has pro-actively worked to increase its intake of apprentices to its in-house training academy in preparation for the future capacity shortage it foresees. The company itself is growing quickly, having added component maintenance, aircraft teardown and trading of used serviceable materials in the past few years to its existing portfolio of heavy airframe maintenance capacities.

Just as ATS is expanding, the aviation industry will also grow in the future. With Boeing holding an orderbook for nearly 5,000 737 MAXs, the aircraft type will play an important part in that growth. “The success of re-entry into service and production pick-up will be critical to the success of the industry,” says Dolan. So too will the need for there to be sufficient MRO capacity for the thousands of 737 MAXs which will be in service in a few years’ time.