Skin crack opens in an SWA 737-300: What will be the effect on the conversion industry?

  • David Harris
  • April 4, 2011
  • 3

The skin failure of a Southwest Airlines 737-300 en-route from Phoenix to Sacramento on Friday ended as well as it possibly could have, with the aircraft safely on the ground and no serious injury or loss of life, but it has brought the skin-cracking issue squarely into the public eye. While the manufacturers, carriers, regulatory agencies (and to some extent the perceptions of the traveling public) will determine the fate of the 737 classics, and Airbus’ similarly-aged short-haul aircraft, in the passenger fleet, we wonder what effects this incident may have on the freighter-conversion business.

If anybody in the conversion industry cares to add insights, I’d sure like to hear them. 737-300s and 737-400s are currently popular conversion candidates, and the first A320 was just inducted for conversion last week at EFW. If these aircraft types are suddenly retired in greater-than-anticipated numbers from passenger fleets, what will the effect be? And what about other types? Are other narrowbodies (757s for example) going to face the same problems? Widebodies?

Regarding the SWA incident, the first public comment from the NTSB was “We have clear evidence the skin separated at the lower rivet line. A preliminary onsite examination reveals pre-existing fatigue along the entire fracture surface.” As far as we can determine, at the time of the accident the aircraft was at about 40,000 cycles and 49,00 hours — not particularly high. And in any case, cycles and hours only tell part of the story, as a high-cycle aircraft may have had fewer hard landings and suffered less turbulence than a younger unit.

It will be some time before full details of the cause of the failure are known, but Southwest responded by immediately grounding 79 of its 737-300s to check for skin-cracking. As I write this, nineteen have been declared safe and returned to service, while three have been found with cracking issues and held for further maintenance. The carrier said it expected to have the inspections completed by 5 April (tomorrow, as I write this). The photo above shows an SWA 737-300 at Paine Field for inspection. Click here for more on the photo story.

 

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3 thoughts on “Skin crack opens in an SWA 737-300: What will be the effect on the conversion industry?

  1. Thanks for your thoughts Jacob. Much appreciated. Now if some of the rest of you would chime in…

     

    And here’s something new to think about: Qantas just announced that it would sell its twenty-one 737-400s. I think this is something they would have done anyway, rather than a sudden decision based on the SWA incident, but the question is: How will the skin-cracking issue affect the sale price? Qantas says it expect to get A$21 million (US$21.6 million) each.

  2. WOW!  21 Million Dollars seems to be a “little” expensive.

    I don’t believe that anyone in the market will pay that much for an aircraft which is between 14-21 years old.

    See below piece from an article published in The Australian today:

     

    The Australian reported a Qantas spokesman saying that the four Boeing 737 aircraft covered by the directive “will be out of service for the required electromagnetic inspection over the next ten days”.

    An emergency grounding isn’t going to do very much for the price that Qantas hopes to get for the full 21-strong 737-400 fleet, which it put up for sale earlier this week. Initial reports that the aircraft could fetch up to $20 million have swiftly been knocked down to $3-4 million.”

    Jacob Netz

     

  3. Hi guys,

     

    Just catching up on some reading, so sorry for the long elapsed time….  I think this is a very interesting subject.  Some thoughts come to mind – just my inane babbling and not reflective of EFW’s view…

    – To me it seems counter intuitive that structural issues like this are a boost to freighter conversion of a type.  We have to wait and see what comes out in the wash, but I just don’t see how something like this can improve a type’s competitive positioning in the long run.

    – I take the point that cargo operators can live with the inspection regime, but the bigger question is what happens when something is found?  At least we thought the lap joint repair was a known quantity.  Now, it seems, we don’t.  Scribe line inspections are another case – here, there is no SB – each case has to be assessed individually.  Therefore, the cost is an unknown.

    – When looking at 737s as potential conversion candidates, financiers (the ones still willing to invest in conversion anyway!) will select aircraft with low cycles because they may never reach the lap joint inspections.  If those inspections are required earlier, the risk for an investor increases.  Given the price of those aircraft now, the required investment for conversion & maintenance could be roughly equal to the aircraft’s value.  The question is – do you make that investment if there is a risk of a nasty surprise down the road?

    – More generally, if we look to the next generation of conversions it is clear the job is going to become more complicated.  Aircraft are built today to save weight, with much less design margin than there used to be.  This means the job of converting them into efficient cargo machines becomes more complex.  Given current indications of conversion pricing for future programs, this will be reflected in the price… that opens the discussion as to what that means for aircraft economics, useful life (shorter?) and ideal conversion age  (younger?)

     

    Just a few thoughts.  Looking forward to discussing next week.

     

    Jon

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