In November 2020, the FAA finally recertified the Boeing (NYSE:BA) 737 MAX for commercial service, following a 20-month grounding. That paved the way for deliveries and commercial flights to resume in December. It also laid the groundwork for two significant 737 MAX orders.

Initial data suggest that Boeing delivered about two dozen 737 MAX jets last month, beginning the process of clearing out its inventory. However, a closer look at Boeing's delivery activity highlights how its most important aircraft program remains in a perilous position.

Deliveries resume

During December, Boeing delivered at least 22 737 MAX 8 and 737 MAX 9 jets to commercial airlines. All but one of those jets -- a 737 MAX 9 delivered to Copa Airlines on Dec. 22 -- went to U.S. airlines. American Airlines (NASDAQ:AAL) received 10 737 MAX 8s last month, Southwest Airlines (NYSE:LUV) received three 737 MAX 8s, and United Airlines (NASDAQ:UAL) took eight 737 MAX 9s.

A Southwest Airlines 737 MAX 8.

Image source: Southwest Airlines.

To some extent, the lack of geographic diversity was driven by the timing of recertification in different jurisdictions. For example, the European Union Aviation Safety Agency is expected to recertify the 737 MAX this month. Moreover, there's no clear timetable for China to lift its grounding order. Thus, two of the world's biggest aviation markets are closed to the Boeing 737 MAX for now. Furthermore, while Transport Canada has signed off on the necessary design changes, it has not lifted its grounding order yet.

On the other hand, Boeing can't blame all of its woes on the timing of recertification. The 737 MAX was recertified in Brazil in late November, and Brazil's GOL became the first airline to return the 737 MAX to commercial service on Dec. 9. Nevertheless, Boeing doesn't appear to have made any 737 MAX deliveries in Brazil last month.

A shallow bench

Indeed, while Boeing has dozens of customers for the 737 MAX, it doesn't have a deep bench of solid, reliable customers. American Airlines, Southwest Airlines, and United Airlines (the three U.S. airlines that took 737 MAX deliveries last month) certainly make the list. Together, they had 496 737 MAX jets on order directly from Boeing as of the end of November. On the other hand, their existing orders cover their narrow-body aircraft needs for at least the next five years, if not longer. For example, Southwest reached an agreement with Boeing last month to take just 35 737 MAX 8s through the end of 2021: a huge reduction from its original plans.

Ryanair and Alaska Air are also important and reliable customers. Both airlines expanded their 737 MAX order books last month. The former exercised options for 75 additional 737 MAX 200s, while the latter placed firm orders for 23 more 737 MAX 9s. That gives Ryanair 210 firm orders and Alaska Airlines 55 firm orders (not counting leased aircraft).

A Boeing 737 MAX 9 flying over clouds

Image source: Boeing.

Beyond these five airlines, though, Boeing doesn't have many dependable 737 MAX customers. While it has a backlog of more than 3,300 "firm" orders, many of those orders aren't as firm as Boeing might like. Over 1,000 so-called firm orders dropped out of Boeing's backlog in the first 11 months of 2020. Additionally, aircraft leasing companies account for more than 700 737 MAX orders, but if they can't place those jets with airlines, they won't take delivery. Airlines that weren't very profitable before the pandemic and have far more aircraft orders than they need account for a substantial proportion of the 737 MAX backlog.

Finally, poor U.S.-China relations appear to be contributing to the indefinite grounding of the 737 MAX in China. All aircraft orders for Chinese airlines are controlled by the Chinese government. Until and unless the U.S. and China reach a major trade deal, Boeing is unlikely to get any new orders in China.

A critical period

The only airlines that have shown a clear ongoing commitment to the 737 MAX in recent months are the usual suspects: American, Southwest, United, Ryanair, and Alaska. While those are good customers for Boeing to have in its back pocket, they alone can't come close to supporting the 737 MAX program.

In the long run, Boeing needs the 737 MAX to be a major player in key growth markets like China, India, and Southeast Asia and sustain a respectable 737 MAX production rate. At present, the leading airlines in those markets are leaning toward Airbus for their narrow-body jet needs.

It's absolutely essential that Boeing get deliveries flowing to well-capitalized airlines in these regions within a year or two. That would pave the way for additional orders as air travel demand recovers. The longer 737 MAX deliveries to key customers in growth markets remain stalled, the greater the risk that those orders will eventually disappear, forcing Boeing to slash production in the future.