April 5, 2019 / 3:54 AM / 2 months ago

Fitch says 737 Max grounding to hurt Asian airline industry more in second quarter

FILE PHOTO: Employees walk by the end of a 737 Max aircraft at the Boeing factory in Renton, Washington, U.S., March 27, 2019. REUTERS/Lindsey Wasson/File Photo

(Reuters) - Fitch Ratings said on Friday the impact on the airline industry in Asia from the grounding of Boeing 737 Max jets has been muted so far but may worsen in the second quarter of 2019.

Boeing’s top-selling aircraft has been grounded worldwide since the March 10 Ethiopian Airlines disaster, which killed 157 people, and came just five months after a Lion Air crash in Indonesia that killed 189.

The grounding of the model has had a limited impact on the fares and performances of airlines in most markets due to seasonally low demand in the first quarter, Fitch said in its report.

It added that there is limited flexibility for airlines to switch to alternatives from Airbus or Boeing.

The Indian aviation market, however, has seen a sharp rise in air fares in the recent months due to tight supply, partly worsened by the suspension of the 737 MAX, Fitch said.

A preliminary report in the Ethiopian crash on Thursday showed that the doomed 737 MAX jet hit excessive speed and was forced downwards by a wrongly-triggered automation system as pilots wrestled to regain control.

Reporting by Gaurika Juneja and Kanishka Singh in Bengaluru; Editing by Gopakumar Warrier

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