The crisis of Boeing 737 MAX

The last two years have been particularly rough for Boeing. In five months, between October 2018 and March 2019, Boeing 737 MAX, had sustained two crashes. The manufacturer’s disclosure of a design defect on this model was the first step towards descent into hell for Boeing whose ordeals are only starting.

Boeing 737Following both crashes, all 737 MAX in operation, that is, 371 aircrafts, were grounded while thousands of flights were cancelled by airliners. Moreover, Boeing was compelled to suspend delivery of new aircrafts and to slow-down production of the 737 MAX. It was later obliged to set aside 5.6 billion USD to compensate losses sustained by its customers.

A further difficulty is the discovery made in October 2019 regarding cracks to the pickle fork (1) of Next Generation Boeing 737. Consequently, fifty defective devices were grounded.

By late September 2019, Boeing losses would amount to 8 billion USD, a figure that does not include the compensation fees disbursed to the victims’ relatives, the fines levied, settlement of disputes and delayed deliveries. It is noteworthy that the aeronautic giant proposed the disbursement of 144 500 USD to each family of the 346 victims of both crashes.

Another setback to be added is when experts placed Boeing below standards in terms of protection against cyber-risks. Security failures were noted at the level of its construction sites, its networks and software. These failures are real menace for the clients as well as for civilian and military aircrafts.

(1) Pickle fork: part that connects the wings to the fuselage.

Interruption of production of Boeing 737 MAX

Boeing’s crisis worsened following the announcement made on January 1, 2020, to shutdown the production of 737 MAX for an undetermined period. The cost pertaining to the maintenance and storage of the grounded aircrafts since March 13, 2019 has considerably impacted the accounts of the manufacturer.

In view of the lack of parking and maintenance area, priority goes to the delivery of the stored aircrafts and not to their manufacture.

Historic losses for Boeing

The crisis of the 737 MAX has heavily affected the 2019 balance accounts of the American manufacturer. For the first time since 1997, Boeing sustained a net loss. The latter amounted to 636 million USD in 2019 versus 10.1 billion USD in profits in 2018. With an order backlog of 5400 aircrafts, Boeing’s Commercial Aircraft Division has reported an operational loss worth 6.6 billion USD versus 8 billion USD in profits one year earlier.

Following the injection of 9.2 billion USD earmarked to address the compensation of the airliners affected by the grounding of aircrafts and delivery delays, Boeing’s bill is now amounting to 18.4 billion USD.

Boeing 737 MAX is now the biggest disaster in the history of civil aviation.

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