In its 2021 Annual Results, filed on March 30, China Southern Airlines (CSA) included scans details about its intentions with the Boeing 737 MAX, referring to it in just a single line.
The airline said 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 a boost for Boeing.
Boeing’s unfilled orders report as of February 28 shows China Southern has 34 737 MAX on order. 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.
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 approval.
While a large portion of the world has allowed the 737 MAX to fly passengers again, China is the last big market holding out. Photo: Getty Images
Why is the MAX still not flying in China?
In December 2021, the CAAC issued an air worthiness directive, essentially 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.
Which begs the question that if the CAAC is prepared to accept the 737 MAX and CSA has 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 total revenue, international traffic has been negligible, falling 48% from 2020 levels.
The latter is unsurprising given China’s dogged 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.”
China Southern has way more aircraft than it needs, so why add more 737 MAX planes? Photo: China Southern
Lock downs are locking out new MAX deliveries
The short answer is China Southern just doesn’t need 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 quickly in China, with April 2021 capacity 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.
Outside of China, the 737 MAX is proving itself daily and with more than 4,000 aircraft in backlog Boeing is fortunately 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 own music?
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