Can Boeing Recover from 737 MAX Production Halt?

Things aren't getting any better for US plane-maker Boeing. It's suspending production of its bestselling 737 MAX. Experts fear there may be considerable delays in the approval of future models.

Never before has the aviation industry been in such a plight. Within a short timespan two passenger planes of a bestselling model crashed, leaving a total of 346 people dead in Indonesia and Ethiopia in 2018 and 2019 respectively.

Both nations are far away from Boeing's home base in the US, but the crashes triggered an earthquake in the industry. The over 370 737 MAX planes delivered in March had to be grounded. The same has applied to all made since.

And just because it remains completely unclear what's going to happen to the 737 MAX, Boeing has taken a drastic step. It decided to suspend production of the plane as of January. So far,

over 40 of the aircraft have left the Renton production site near Seattle every month and have had to be parked somewhere in the desert, at a test flight facility, the Moses Lake Airfield or elsewhere. Each of the planes in question has a market value of some $100 million (€90 million).

Boeing didn't say when production would resume and what the temporary halt would mean for the company financially. It only said that financial details would be released together with the firm's end-of-January earnings report.

Airlines suffering

The chief economist at the IATA industry group, Brian Pearce, said many airlines had already been hit hard by the halt of deliveries. The topic keeps topping public agendas as US Congress hearings continue. When he appeared before them in mid-December, Boeing chief Dennis Muilenberg didn't cut a particularly impressive figure. The pressure on him will increase further with the production stop announced this week.

A former top executive at Boeing had called the company a factory in chaos, saying that time pressure and exhausted employees had impacted quality.

The 737 MAX crisis has cast Boeing in a bad light as a whole and its clear that the firm should have left some internal control procedures to the Federal Aviation Administration (FAA). FAA officials had meanwhile admitted the administration should have ordered a flight ban right after the first 737 MAX crash.

Can trust be won back?

But the big question is when the 737 MAX will be allowed to take off again. That's unlikely to happen before the introduction of the summer flight schedule toward the end of March, if at all.

Boeing has meanwhile revised its pitch stability system called MCAS (Maneuvering Characteristics Augmentation System), and experts seem happy about the changes made. IATA's security expert Gilberto Lopez Meyer said he had flown the two MCAS versions in the simulator and added Boeing had found a solution to the problem.

Whether it will be possible to regain lost faith is a different matter. TUIfly chief Oliver Lackmann, himself a 737 pilot, said he'd fly the revised model himself more often so as to tell passengers they can trust the plane.

TUIfly is the only German airline that has ordered MAX planes. It was meant to get its first aircraft from Seattle on the very day the flight ban went into effect.

Future approval mechanisms

It'll be interesting to see how future plane models will be approved by regulators. So far, there had been a practice of FAA-certified planes being automatically approved by its European counterpart, EASA. But because of the mistakes made at the FAA, some national authorities want to install their own approval mechanisms and not rely anymore on other nations' certification procedures. This could cause considerable extra costs as well as delays in plane deliveries.

IATA's Gilberto Lopez Meyer fears political interference. He demands that the old system be retained.

So far, global passenger volumes have not been seriously affected by the 737 MAX crisis, with the plane standing for only 0.1% of air traveler volumes. For Boeing, though, it's by far the worst crisis it has witnessed in all of its 100-plus years. There's been no shortage of bad news. The new long-haul 777X, which has also been ordered by Lufthansa, is in for massive delays and has never taken off so far.

The 787 is also reported to have quality issues and probably also security issues after Boeing reduced anti-lightning strike technology. By contrast, Boeing's European rival, Airbus, is a lot better off, although it's struggling to increase production of its bestselling A320 series planes to up to 65 per month.

Airbus CEO Guillaume Faury doesn't want to portray his company as a beneficiary of Boeing's crisis. He noted that Airbus has enough on its plate to handle the 6,000 or so plane orders — that would take the firm between eight and nine years. He added that since order books were full, Airbus could not replace any of the 737 MAX planes on demand.


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