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Disaster Machine 737 Max: Boeing's expensive parking maneuvers

2019-04-20T12:00:42.096Z

Since the catastrophe involving two Boeing aircraft, almost 400 Type 737 Max aircraft have remained on the ground. Airlines and shareholders want damages. How expensive is this for the aircraft manufacturer?



Dennis Muilenburg spent his entire career at Boeing. In 1985, the 21-year-old began as an intern at the US aviation company, later he worked his way up as an engineer and manager up to the CEO.

But nothing could prepare Muilenburg for the horrors of this year. "The last few weeks," he complains about the crashes of two identical Boeing machines and their consequences, "were the hardest of my career."

The disasters in Indonesia and Ethiopia, in which 346 people died, have shaken one of America's most important companies. Boeing's best-selling jet, the Boeing 737 Max, has been standing still since March, with many airlines having to rebuild their summer schedules. Now threaten the first class action lawsuits against Boeing.

How exactly it all affects the group, will be seen next Wednesday, when Boeing presents its next quarterly figures, the first since the calamities. "Boeing's revenue, earnings and margins for 2019 are at risk," writes Bloomberg analyst George Ferguson, who fears quarterly losses of about $ 3.6 billion.

Lindsey Wasson / REUTERS

Parked Boeing 737 Max at Seattle

"Two crashes in such a short run without survivors are unprecedented in the modern aviation industry," said Chesley "Sully" Sullenberger, the retired pilot who landed a passenger jet on the Hudson River in 2009, the "New York Times." Boeing must now "do everything possible to prove that they deserve the trust of the public."

The Boeing share - the most important in the Dow Jones benchmark index - has already lost more than ten percent since the Ethiopian Air crash in March. Not only investors are worried: Boeing is the largest US exporter with annual sales of $ 101.1 billion and more than 140,000 employees. What goes wrong with him, goes around the world: The global 737-Max fleet includes nearly 400 machines on 59 airlines, from Aerolineas Argentinas to Xiamen Airlines.

The jets will initially remain parked in the hangar until the MCAS control software, which is held responsible for the crashes, is modified and re-certified. According to bank JP Morgan Chase alone, flight cancellations alone could cost Boeing about $ 115 million a month, as the airlines concerned are likely to pass on their bills to Boeing.

"Patience and understanding"

For example, the world's largest US carrier American Airlines, which operates two dozen 737 Max, has canceled 115 flights per day by mid-August. While that's only 1.5 percent of all connections, summer time travel will have a knock-on effect - which is why American slowed its first-quarter revenue expectations.

"We value your patience and understanding," wrote Bridget Blaise-Shamai, head of the American AAdvantage mileage program, on Tuesday in an email to regular customers.

Southwest Airlines, which owns 43 Max 737s, more than any other company, has also taken the model out of the flight schedule by early August. United Airlines is planning cancellations - a good 40 flights a day - initially only until the beginning of June. "But at the height of the busy summer season, these changes will be increasingly difficult," warned the spokesman.

REUTERS

A Boeing 737 Max before taking out in March

The Max 737 contests 80 percent of the Boeing order book. Now this source is booming: In the first quarter, there were only 32 new orders, 90 fewer than in the same period of 2018. Boeing has therefore throttled its entire 737 production from 52 to 42 a month. Whether this lull will last, will clarify at the latest at the Paris Air Show, the industry fair in June.

When the 737 Max may fly again, remains uncertain. Boeing has recently found additional software issues, delaying recertification. Only then can the machines be re-equipped and the pilots re-trained.

Who wants to fly with Boeing?

Additional blockades could come from the US Congress, which examines Boeing's proximity to US air traffic control FAA. The Ministry of Justice and the Ministry of Transport are also examining the Max 737 design. JP Morgan analyst Seth Seifman writes that all of this may even take until November.

But even then, the question arises whether the passengers continue to trust Boeing. According to a poll, 53 percent of Americans do not want to fly 737 max more, even if the FAA releases them. Add to that the legal consequences that can cost Boeing many billions of dollars. The first survivors of the crashes have sued the company, and Boeing shareholders are considering a class action lawsuit.

AFP

(No) fear of flying: Boeing boss Dennis Muilenburg

What to do? US President Donald Trump, who likes to be a brand expert, advises Boeing to simply rename the 737 Max - which is a modified version of the decade-old 737. Insiders consider this pointless: "You can not hide the 737," said industry analyst Henry Harteveldt of the website "Business Insider," which in turn speculated that Boeing will design a completely new model.

Dennis Muilenburg holds at least outward to the 737 Max. Recently he completed a test flight with the updated software. "The update worked as planned," Boeing explained afterwards. "The pilots landed safely."

Source: spiegel

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