Boeing 737 MAX jet headed toward China completion plant

By Stella Qiu and Jamie Freed

BEIJING / SYDNEY (Reuters) -A Boeing (NYSE 🙂 737 MAX jet that took off from Seattle on Monday is en route to the manufacturer’s completion plant in China, an industry source said, in a sign the model is closer to returning to commercial flights there after a three-year grounding.

Flight tracking websites showed the plane, painted in the livery of Shanghai Airlines – a subsidiary of China Eastern Airlines (NYSE 🙂 – had landed in Hawaii.

The source, who was not authorized to speak publicly, said it was the first fuel stop of a multi-day journey.

The Zhoushan plant, used for installing interiors before delivery, opened in December 2018, a few months before a second fatal MAX crash led China to ground the model.

“If this points to a delivery, it will be the first MAX delivery to China since March 2019, which is material as the country has historically represented 17% of deliveries,” Jefferies analysts said in a note to clients.

China, the first country to ground the MAX, is the only major global market where the aircraft is still not in commercial service, and its return is taking longer than expected at a time when domestic demand is declining as COVID-19 cases rise.

China’s aviation regulator in early December provided airlines with a list of fixes required before its return to commercial flying, which it predicted would occur by the beginning of this year.

So far, however, there have been only test flights, in a move that has also delayed deliveries of more than 100 MAX jets already built for Chinese customers that are located at Boeing sites in the United States.

Boeing Chief Executive David Calhoun said on Jan. 26 that his company was getting ready to deliver those planes as early as the first quarter, once the fleet already in China returned to service.

Boeing declined to comment on the MAX flight to Zhoushan.

The planemaker said in a statement that it continued to work with regulators and customers on the MAX return to service worldwide.

Chinese airlines are in no rush to bring back the MAX because of falling domestic demand amid the biggest COVID-19 outbreaks in two years, three people familiar with the matter told Reuters on condition of anonymity because they were not authorized to speak publicly.

“There is less urgency to add capacity now,” one of the people said.

China Southern Airlines is among the Chinese airlines closest to returning the plane to commercial service and might be the first to do so, the person said.

China Southern did not respond immediately to a request for comment.