The recent emergency landing of an Alaska Airlines 737 MAX 9 flight has caused concerns among nervous flyers and a ripple effect in the airline industry. Additionally, it has impacted airline investors, particularly those with a significant exposure to the MAX 9 aircraft.

Alaska Air, not surprisingly, experienced the most significant decline in early trading among U.S. airline stocks, with a loss of 4.4%. The incident, involving a mid-air fuselage blowout, occurred on one of their flights, making them particularly vulnerable since they heavily rely on the MAX 9 jet. In fact, Alaska Air, including its subsidiary Horizon Air, operates a total of 65 MAX 9 aircraft, which accounts for more than 20% of their fleet consisting of 314 planes.

While United Airlines has the largest number of MAX 9 aircraft at 79, it represents only 8% of their total fleet size, as the airline operates a substantially larger number of planes overall, as reported by TD Cowen analysts. In comparison, Copa Airlines, the national carrier of Panama, operates 29 MAX 9 aircraft.

Interestingly, the major U.S. airlines do not operate any MAX 9 aircraft, offering them some relief from the current situation. In terms of other international carriers, Aeromexico has 19 MAX 9 planes in service, while Turkish Airlines and Icelandair operate five and four respectively.

Currently, the impact on airlines operating MAX 9 jets remains uncertain. The Federal Aviation Administration has issued a temporary grounding of these aircraft and mandated inspections before they can resume flying.

This incident serves as a reminder for the aviation industry to prioritize safety and passenger confidence. It highlights the importance of thorough investigations and appropriate measures to ensure a safe flying experience for all travelers.

Aviation Industry Faces Temporary Grounding

The recent temporary grounding of Boeing 737 MAX jets is nowhere near on the same scale as the global grounding witnessed in 2019 due to two fatal crashes. However, the impact of this grounding will still be felt by Alaska, United, and Copa airlines.

United has already canceled 260 flights, which accounts for 9% of their schedule, on Sunday, and a further 204 flights, equivalent to 7% of its Monday flights. Similarly, Alaska Airlines had to cancel 165 flights, totaling 21% of their schedule on Sunday, and an additional 139 flights, equivalent to 20% of its Monday flights. Copa Airlines has also felt the effects, canceling 14% of its flights on Sunday and seeing a further 21% cancelation rate on Monday.

Industry analysts are closely watching the financial impact on these airlines. TD Cowen analyst, Helane Becker, predicts that the trio will disclose the effect on their financial performance when reporting fourth-quarter earnings in the coming weeks. However, Becker believes that certain factors will limit the overall impact. She points out that January is typically a relatively slow month for the industry, and the timing of these cancellations post-holidays is somewhat less disruptive. Moreover, this quarter benefits from an extra day of travel due to the leap year, potentially boosting earnings.

J.P. Morgan analyst, Guilherme Mendes, does not consider the problems to be long-lasting. He remains upbeat about Copa Airlines, still regarding it as his top pick among Latin American carriers. Mendes rates the stock as "Overweight." Furthermore, he highlights that most airlines anticipate completing the required inspections within the coming days, enabling the MAX 9 aircraft to resume operations.

While the situation is being closely monitored within the industry, it is expected that the impact will be temporary.

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