MarketLine Blog

Boeing 737 MAX: Public action needed to rebuff long-term threats

Even before the deadly crashes, Boeing had already staked much on sales of the MAX. Created to catch-up with new offerings from Airbus, the 737 MAX was reportedly rushed into service. According to a ’60 Minutes’ investigation, development was carried out under demands from the higher management echelons that the new version of the plane be as close to the previous version as possible. So far only one airliner, Indonesian based Garuda, has cancelled an order. The company was scheduled to receive 49 more MAX aircraft, having already been delivered one. However, the company has since reversed course. Threats of orders being cancelled make for bad headlines but in reality rival Airbus is enjoying stuffed order books too. Without extra capacity on Airbus production lines, airlines are stuck with seeking compensation from Boeing for grounded aircraft and delays to deliveries.

That issues with an anti-stall system are now accepted to have been known about in advance of the first crash – Lion Air flight 610 on 29th October 2018 – has revealed much about how the company was operating during the development of the latest version of the 737. . For Boeing the removal of Muilengburg would be a major public statement that the company was changing from the top down to prevent further tragedies from occurring again. Arguably this should have occurred when it first became known publicly that Boeing had knowledge that serious problems had been designed into the new plane. When the 737 does, as everyone expects, return to commercial flight, and Boeing attempts to sell more of the plane, doing so with a new face in charge would likely help the company restore damage not done by the crashes themselves but by the news the plane maker knew about problems in advance.

However, the short-term problems should not cause undue problems. At present airlines are making claims of compensation to Boeing. Planes have not been delivered, meaning fleets are not being expanded, and many airlines are paying for aircraft stuck at airports. But Boeing has the financial resources to cope.

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