China Southern Airlines tells it wants more Boeing 737 MAX aircraft in 2022, so what’s the hold-up?
In its 2021 Annual Results, filed on March 30, China Southern Airlines (CSA) included scant details about its intentions with the Boeing 737 MAX, referring to it in just a single line.
China Southern Airlines
The airline told it plans to add 39 Boeing 737 jets to its fleet in 2022 and 103 by the end of 2024.
While this is down from last year’s CSA forecast to add 48 in 2022, any sign of movement on MAX deliveries in China is growth for Boeing.
Boeing’s unfilled orders information as of February 28 shows China Southern Airlines has 34 737 MAX on demand. Boeing has 4,137 unfilled 737 MAX orders, with 724 attributed to ‘unidentified customers’.
According to planespotters.net, CSA has a fleet of 213 Boeing 737s, of which 24 are Max 8s. Its total fleet numbers 640 aircraft, of which there are 297 Airbus A320 family aircraft.
Civil Aviation Administration of China
While major aviation regulators around the world, including the FAA and EASA, have cleared the MAX to return, the Civil Aviation Administration of China (CAAC) has yet to apply its final stamp of support.
In December 2021, the CAAC issued an airworthiness directive, effectively advising that when all the hardware and software changes are applied and pilots are retrained on the updated systems, the MAX can return.
In January, CSA completed a three-and-a-half-hour test flight with one of its 737 MAX aircraft, tracking out and back from Guangzhou Baiyun International Airport.
This begs the question if the CAAC is prepared to accept the 737 MAX and CSA have successfully tested the aircraft, why is it not taking more aircraft sooner? A deeper look into the 2021 annual results answers that question.
As have most of the world’s airlines, CSA has had two years of poor financial results, losing RMB10.8 billion ($1.7b) in 2021 and RMB12.1 billion ($1.9b) last year.
While domestic traffic has been making a stop-start recovery, accounting for 92% of entire revenue, international traffic has been negligible, falling 48% from 2020 levels.
The latter is unsurprising given China’s determined pursuit of a zero-COVID policy and its closed borders, although its report does point to “the continuous impact of [the] overseas COVID-19 pandemic.”
The short answer is that China Southern just doesn’t require the planes while the strict zero-COVID strategy remains. Today, Shanghai, a city of 26 million, and a two-hour flight from CSA’s hub in Guangzhou, is in almost total lockdown and facing another 10 days of isolation.
Locking down a city of Shanghai’s size paralyzes airlines and with more than 640 aircraft at its disposal, CSA is in no rush to add more, particularly after losing $3.6 billion in two years.
Domestic air travel rebounded fast in China
Domestic air travel rebounded fast in China, with April 2021 ability at the country’s three biggest airlines surpassing pre-COVID levels. By November, with COVID outbreaks impacting, domestic air traffic tumbled to just 40% of pre-COVID levels.
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Outside of China, the 737 MAX is proving itself daily and with more than 4,000 aircraft in backlog Boeing is fortunate the rest of the world seems to have pushed any notion of zero-COVID out the window.
With so many airlines building capacity and wanting to fly cleaner and greener aircraft, will Boeing look to find new homes for all those undelivered aircraft while China continues dancing to its music?
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