(Yicai Global) March 20 -- China and several other countries have closed their airspace to the Boeing 737 Max 8 after one operated by Ethiopian Airlines crashed soon after takeoff on March 10. 

The crash, which came less than five months after one flying under Indonesia's Lion Air also went done under similar circumstances, will greatly impact global aviation, with leasing companies that have ordered the planes but not yet taken delivery eyeing potentially massive losses. 

Chicago-based Boeing had delivered a mere 350 737 Max units worldwide by the end of January this year of the 5,111 orders it held in total, data shows. 

Chinese-funded leasing firms occupy an important position among customers of the 737 Max model, along with major airlines. China Development Bank Leasing, Industrial and Commercial Bank of China Leasing, Bank of China Aviation and Bohai Leasing ordered nearly 300 737 Max craft between them, and most have not been delivered. 

Though the global deliveries have not been many, the grounding has still wrought a huge impact on the leasing sector, Guo Yuqiang, vice general manager of Zhongyuan Aviation Leasing, told Yicai Global, adding companies that ordered the model but have not received their aircraft will take a body blow if Boeing cannot solve its technical glitches in a timely manner. 

Whether they can receive rent for as-yet undelivered aircraft is just one problem for leasing companies that have ordered many of the 737 Max, one that will necessitate negotiations with airlines, Guo said. They will also need to make huge prepayments for the undelivered planes and run the risk of then failing to find clients. 

China International Capital recently lowered the investment rating of BOC Aviation to 'hold' in a report, which states that the 737 Max model makes up nearly half of the planes the leasing company has ordered but these have yet been delivered, and BOC Aviation may have paid some of the price for the plane order, adding the model's grounding will bring uncertainty to its short-term earnings and long-term growth prospects. 

Do Something, Quick

Boeing has not delivered most of the orders of Chinese airlines and leasing companies, but none of them have expressed a desire to cancel their orders, and all are waiting for the US aviation behemoth to come up with a solution, an executive at a leasing company which ordered many of the planes told Yicai Global. 

Airlines further need to pay direct operating costs such as rents or bank loans, maintenance fees, depreciation expenses, airplane parking fees and personnel costs, even though the 737 Max model has been mothballed.

Whether airlines will assert claims against leasing companies under such huge pressure is uncertain. 

A lessee generally has an unconditionally obligation to pay rent in aircraft leases, Guo said, and thus airlines must pony up whether a plane is idled or not. 

The airspace closure will greatly impact annual planning, and the capital arrangement and expansion plans of these companies since aircraft leasing is their major business, though airlines probably will not tighten the thumbscrews too much. 

Procurement costs may also rise with one major supplier lacking since airlines may turn to Airbus to fill the transport capacity gap wrenched open by the sidelining of such a mainstream model. 

"It's not good. The market need competitions between giants and we don't want Airbus to become the dominant player," Guo added.

Editor: Ben Armour