# How much does it cost to ground a B737 max aircraft for an airline?

What are the cost items for which an operator with such an aircraft in the fleet incurs per aircraft because of the grounding of the Boeing 737 max aircrafts and how much is the average cost incurred?

Is there any possibility of claiming the losses by the airline companies from the Boeing company?

• I am guessing that the cost is actually not the big problem. I expect loss of revenue to dwarf the costs by orders of magnitude. You need to pay for parking, and that's pretty much it. – Jörg W Mittag May 16 '19 at 20:11

Well we can look at another grounding case to see what it costs.

Boeing grounded the 787 Dreamliner. This grounding lasted about 90 days (at least as of the estimated costs by ANA, I think the actual grounding lasted about 116 days).

Japanese carrier ANA had the largest 787 fleet at the time with 17 of the 51 in operation estimated it's costs at $15 million. Doing some simple math, \$15,000,000 for 17 aircraft works out to be about \$882,352 per aircraft for the 90 day grounding. This is about$9,800 per day/aircraft.

They also estimated that this resulted in ¥1.4 billion in lost revenue. This is \$12.7m USD (in today's dollars). That gives a lost revenue of about$3320 per seat, per day (averaging 250 seats per aircraft).

Now taking into account that there are 393 737 MAX aircraft as of the grounding, with an average seating of around 190 passengers, this could cost airlines significantly. Just in terms of costs, extrapolating the 787 numbers and assuming they are grounded for 6 months, looking at about half a billion dollars (*assuming the costs for grounding the 737 are 75% of the 787 in terms of storage and maintenance) for the entire industry.

In terms of lost passenger revenue, we can assume the numbers are about on par with the 787 since it is a more heavily utilized aircraft (shorter routes, more flights/day). Using the same 787 numbers we would be looking at about $44.6 billion dollars, again, industry wide (and yes, this number seems extremely high to me, but working from what ANA claims). Can they claim this cost for Boeing? Maybe. They may be able to recover the costs of storing and maintaining the aircraft during the grounding. It is unlikely that they would be able to recover the lost revenue (and it would put Boeing out of business to do so). We'll have to see when this all washes out what the airlines do with Boeing. Most likely they will negotiate deals with Boeing for preferential pricing on future aircraft or some other kind of cost-offsetting deal. • Is your "44.6 trillion dollars" supposed to be Yen? – 8one6 May 17 '19 at 14:07 • @8one6 No, it is USD. 3320 USD per seat, per day. Averaging 190 seats for the 737 that is 630,800 per aircraft, per day, times 393 aircraft is 247,904,400 USD per day for the entire fleet. Multiply by 180 days (estimated) and you get 44.6 trillion USD. It seems high to me, yes. I'd guess that the number is closer to \$1000 per seat, which would still be more than $14 trillion USD. – Ron Beyer May 17 '19 at 14:09 • What am I missing....247mm * 180 = 44bn, not 44tn, right? – 8one6 May 17 '19 at 14:14 • My brain is on weekend mode... – Ron Beyer May 17 '19 at 14:15 • The 3320 USD lost revenue per seat sounds excessively high. The 787 aircraft would only fly a leg or two per day meaning an average ticket price of at least$1660, a very expensive ticket... – Notts90 supports Monica May 17 '19 at 14:33

To answer the second part, airliners come with all sorts of warranties. This is because any small problem on an aircraft easily can reach into the tens to hundreds of thousands of dollars. This makes it economic to get lawyers involved and sue, so both sides have incentives to write down everything that likely goes wrong and agree on appropriate compensation as part of the purchase contract.

That way, when an issue occurs, they'll be more likely to pull out the contract and figure out what is owed, rather than fight over it in the courts.

The applicable warranty for groundings would be a dispatch warranty that says that cancelled flights due to technical reasons are less than some percent, or else $X will be paid per cancelled flight over the limit. These details are proprietary and negotiated with each customer, so it is difficult to know what$X is, which may vary by customer as well. A typical contract is here, filed with the SEC. You can see that Airbus does provide a "DISPATCH RELIABILITY GUARANTEE" but that's pretty much all that is known publicly.

A separate warranty of airworthiness would cover the costs for any repairs. Those are much simpler: the airframer would provide a credit for the cost of parts, plus an amount per labor hour.