November 21, 2019 / 10:30 AM / 23 days ago

Major 737 MAX customer SMBC says it will take time to return plane to service

DUBLIN (Reuters) - Aircraft leasing firm SMBC Aviation Capital, a major customer of Boeing’s (BA.N) 737 MAX jet, does not expect the grounding of the plane to be lifted until early next year, and warned it would take time to bring it back into service.

The Dublin-based firm, which owns or manages 17 MAX jets, has 89 firm orders and is committed to a fleet of 133 in total, also said on Thursday the unwinding of its delivery backlog for the jet would take “quite a bit of time.”

“We are taking a rather prudent view about how that is going to play out,” Chief Executive Peter Barrett said in an interview.

“We think it is likely to be a Q1 ungrounding rather than this year. But ... whenever that happens there is also the challenge of getting them all in the air and returned to service and that’s going to take a lot of time,” he said.

Earlier this month, Boeing said it expected the U.S. Federal Aviation Administration (FAA) to lift the MAX’s grounding in mid December. The FAA said it would take whatever time was needed.

The MAX was grounded in March after two fatal crashes and Boeing has been upgrading an anti-stall system which inspectors believe had a role in the disasters.

Barrett said recent reports of structural issues on earlier versions of the 737 were normal for a maturing fleet and there had been no sign of lease rates weakening for such models.

SMBC, which also reported a 19% annual increase in pretax profit to $200 million for the six months to Sept. 30, said lease extensions linked to the MAX grounding and production delays at rivals would likely continue over the coming 6-12 months.

Reporting by Conor Humphries; Editing by Mark Potter

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