FOR A FREE, PRINTABLE VERSION, CLICK HERE.
Boeing Aims to Recover from 737 MAX Disasters Download
Boeing has faced tragedy and turbulence this year related to the introduction of its 737 MAX planes. Boeing grounded its new line of planes after two deadly crashes which were blamed on faulty flight control systems. The potential fix in software must be approved by regulators, but Boeing has not submitted any plans for review. This leaves a great deal of uncertainty and financial losses for companies such as Southwest Airlines, American Airlines, and Norwegian Air. Southwest has been a loyal 737 customer and only flies variants of the 737. The company's operational excellence has been attributed to cost savings and operational advantages. Mechanics at Southwest only need to be familiar with one plane. This delay in being able to deliver 737 MAX planes to customers is hurting Boeing's stock performance and its relationship with current and prospective customers and is creating a potential liability as airlines are suffering significant losses. Southwest estimates losses in 2019 of well over $600 million. American Airlines anticipates similar losses of around $540 million. The financially damaged airlines are pressuring Boeing to compensate them for the losses. Airlines who made commitments to Boeing for the 737 MAX planes have been waiting for 8 months.
In light of Boeing's difficulties, Airbus recently received one of its largest orders in history for 300 Airbus SE planes from Indigo Airlines (doubling its orders for last year). The list price of this order is $33 billion. Indigo Airlines is now Airbus's biggest customer, having ordered more than 700 planes. Airbus also announced an agreement for 100 planes to be purchased by Florida-based Spirit Airlines. By comparison, Airbus has delivered 571 planes this year, versus 301 for Boeing.
How the Federal Aviation Administration (FAA) approved the original MAX plane seems to be based on Boeing's initial flight simulator results. The FAA again, as the regulatory body in the aviation industry, had a chance to ground the MAX fleet after the October 2018 crash. FAA officials indicated that Boeing lead them to believe they that a solution could be developed. Instead of halting flights, it reminded pilots how to respond in emergency situations. The second fatal MAX crash of Ethiopian Airlines caused the grounding of the Boeing 737 MAX fleet with the potential for FAA approval to clear the planes for flight expected in early 2020.
Congressional testimony will determine what key decision makers like Boeing CEO Dennis Muilenburg knew about the design, safety, and testing of the planes. Evidence from an instant message exchange showed test pilot concerns over the MCAS flight control system and flight-control maneuvers during testing. Senators questioned Muilenburg about the culture at Boeing when information was presented to the Department of Justice in February, yet the CEO claims to not have been aware until months later.
© Daniels Fund 2019. All rights reserved.