Boeing’s 737 Max 8: What’s Next for the Company Amid Safety Concerns

This week was supposed to mark the ceremonial debut of  “the largest and most efficient twin-engine jet in the world”- Boeing’s new long-haul 777X jetliner. Instead, the American aerospace’s plans were thrown into disarray and its share prices fell by 15% after its new Boeing 737 Max 8 jet crashed in Ethiopia on Sunday, killing all 149 passengers and 8 crew aboard. This comes just five months after a deadly crash off the coast of Indonesia involving an identical brand-new jet by Lion Air.

Aviation experts say that there isn’t conclusive evidence so far to link the Ethiopian Airlines and Lion Air crashes and have cautioned against drawing comparisons between the two, particularly as there are still unanswered questions about the causes of the Lion Air crash. “It is much, much too early to know if there are any similarities other than it was the same aircraft type on ascent.  Until we know that we are speculating and that is not helpful.” Andrew Charlton, the managing director at Aviation Advocacy, told Majalla.

Still, Boeing is facing mounting pressure.

TECHNOLOGY UNDER SCRUTINY

The US became the last country to suspend the jet after intense international pressure as one nation after the other grounded the 737 Max. Until Wednesday, The Federal Aviation Administration said that there was no basis for grounding the flight.  China’s aviation regular was the first to order the grounding of all Max 8 planes on Monday. The authorities in Australia, Britain, France and Germany quickly followed suit, as did Europe’s aviation-safety regulator.

In a statement, Boeing said it "continues to have full confidence in the safety of the 737 Max" but had suspended all 371 of its global fleet "out of an abundance of caution and in order to reassure the flying public".

Trump’s action, which the president said was based on “new information and physical evidence that we’ve received,” raised new questions about Boeing’s and the FAA’s hitherto defiant stance and whether the company and its regulator were playing down serious issues with the plane.

Some pilots and aviation experts say Boeing and the FAA have not been fully forthcoming in addressing persistent problems with complex automatic adjustment software called the Maneuvering Characteristics Augmentation System, or MCAS.

The technology under scrutiny is part of the flight control software on both the Max 8 and the Max 9. If information from the Ethiopian Airlines crash suggests the software might have been a factor in the disaster, the consequences for Boeing could be severe. It has already begun a costly and complex redesign of the flight control software. 

The day before the Lion Air crash, the pilots who flew the same airplane reported problems with the angle-of-attack sensor, which tells pilots the angle of the airplane as it passes through the air. Maintenance workers at Lion Air replaced the sensor, and the plane was put back in service to fly as Flight 610. Until this point, Boeing had not included a warning about the function of MCAS in the flight manual for the MAX-8 nor as part of the training of pilots converting from earlier model 737s to the new model.

After the Lion Air crash, American pilots' unions raised concerns over the MCAS system and claimed they had received insufficient training to retake control in the case of a malfunction.

According to an FAA database reviewed by Politico pilots in the United States have complained at least five times in recent months about problems controlling the Boeing 737 Max 8, and some of the incidents appeared to involve the MCAS system.

In one documented complaint, a pilot said the plane's downturn triggered the ground proximity warning system, which is designed to alert pilots when their planes are in immediate danger. The complaint states an alarm sounded “don’t sink, don’t sink” before the captain disconnected the autopilot and manually adjusted the plane to climb.

Another pilot called the flight manual  “inadequate and almost criminally insufficient” and said, “all airlines that operate the MAX must insist that Boeing incorporate ALL systems in their manuals."

WHAT DOES THIS MEAN FOR BOEING?

Although it is too early to know how long the grounding will last what the fallout will be, the news is not good for Boeing and the threat to the company’s reputation and financial health is growing. 

The 737 has been Boeing’s bestselling product for decades and is considered one of the industry’s most reliable aircrafts. The company’s future depends on the success of the fuel-efficient 737 Max 8, the newest version of the jet.  Investors are concerned because of how important the Max 8 is to the company’s revenues. If these planes have to be grounded for months or years that could cost Boeing a lot of revenue and profit.

China is Boeing’s most important market which is why China’s decision to ground all Max 8 jets operated by its airlines is so significant. Boeing had predicted that China will soon become the world’s first trillion-dollar market for jets. By 2037, they had predicted that China would need 7,690 commercial jets to meet its travel demands.

Jefferies expected the 737 Max 8 to generate about $32 billion for Boeing in 2019 and in the investment bank’s worst-case scenario -- a software problem causing a full grounding and halt to deliveries of the plane  -- could cost Boeing about $5.1 billion, or 5 percent of the company’s annual revenue, within two months," according to the Post.

Chief Market Analyst at CMC Markets, Michael Hewson, wrote that although the damage thus far has been fairly limited, the two crashes “could well blow a large hole” in Boeing’s forecasts. “With the sale of 737 MAX 8’s a key component in the company’s growth prospects for 2019, and expected to contribute up to 30% of the company’s profits, the ongoing lack of confidence in the aircraft, as countries line up to ground the aircraft, is likely to see that percentage significantly reduced.”

If the cause of the crashes and not resolved quickly and uncertainty turns into cancelled orders, Boeing’s problems could well go from bad to worse, Newson wrote.

“As things stand Airbus shares have risen sharply on the back of Boeing’s woes with the shares at record highs, and up over 3% since last Friday, in anticipation of more orders for their A320 model,” he added.

This point was backed by Henry Harteveldt, a travel industry analyst with Atmosphere Research Group. “I believe that whatever the problems are will be temporary in nature provided Boeing acts quickly and decisively once the problems are known.” But Boeing still has to work with investigators to come up with the definitive causes of both accidents, Harteveldt says, how they differ or mirror each other "and then determine what can they do .. Is it an engineering problem? Is it a software problem? Is it a training problem?’’

The two deadly accidents raised questions and public alarm about the safety of the aircraft. Aviation expert Andrew Charlton said to Majalla that the public should feel confident in the airline industry: “Recently, A380s were grounded after a Qantas incident, B787s after a wiring issue. The industry does the right thing, quickly.”

“Consumers should be confident such steps are taken. The impact on the industry is slight in the long run, if potentially bad in the very short run if your flight is rescheduled.”

Asked whether he would have any hesitations boarding a Boeing 737 Max 8, Charlton said: “Living in Europe, there are not many of the aircrafts around so I am not sure I would be able to do so.  Countries around Europe are now grounding them voluntarily so it will be quite hard to fly in them. I have no doubt that the industry will behave responsibly.”


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