Boeing: The biggest crisis in the company's history
Landing Defective Aircraft, Order Cancellations and Refusal to Refund $ 300 Million Advance
Almost a year after it started, the crisis at Boeing continues. Defective 737 Maxs continue to be stuck since March 2019, after two fatal crashes in just 5 months - Flight 310 of Lion Air on October 29, 2018 in Indonesia and Flight 302 of Ethiopian Airlines Flight on March 10 of 2019 in Ethiopia - which cost the lives of 346 people, financially burdening the company every day more and more.
It was in 2011 when the new 737 Max was announced, one airplane which was described as the next generation of the company's most successful model, which was released in 2017. With new more fuel efficient engines and updated aircraft cabins, it would have greater range, lower operating costs and quite common with previous models, so that pilots to be able to easily handle it without additional training.
However, two fatal crashes in five months - which should not have happened in a modern jet - in which a total of 5 people were killed, raised various questions about the design and features of the aircraft. As of March 346, 19, the 2019 Max is stuck around the world with Boeing working day and night to correct what appears to be a major defect in the aircraft.
In November 2018, a week after the first accident, Boeing and the US Federal Aviation Administration (FAA) sent the airlines updated crew procedures to disable MCAS if it did not work.
Both crashes were linked to a new flight control software known as MCAS, which malfunctioned on both flights. A system, which the construction company had failed to mention how it is deactivated both in the crew manuals and during the pilot training.
As it turned out, in fact, some of the pilots were not fully aware of the new system, one of the surprises discovered in recent months and one of the reasons Boeing now proposes full training in simulators for all pilots. piloting Max aircraft.
On March 11, 2019, the Civil Aviation Administration of China ordered the first grounding of this aircraft at the national level, followed by other regulatory authorities in a short time. The FAA publicly confirmed the airworthiness of the plane on March 11 and on the 13th of the same month it fixed everything, as it received evidence of similarities between the two accidents. As of March 18, a total of 387 737 Max aircraft were grounded worldwide, serving 8.600 flights each week on behalf of 59 airlines. Although Boeing suspended Max deliveries to airlines, it produced an additional 400 aircraft of the same type before stopping construction in January 2020.
The Boeing crashed aircraft, as expected, had a major economic impact on both the company and the national economy of the United States (in January 2020, US Treasury Secretary Steven Moussin estimated that the Boeing crisis could have an impact by half a percentage point in US economic growth in 2020).
No airline received the aircraft while stuck, and Boeing slowed production to 42 aircraft a month until January 2020, when production ceased altogether, until it was re-approved by regulators in 737 Max.
With about 400 737 Maxs in storage until authorities lift the model, the plane does not appear to be returning to the airwaves until late summer and early autumn, according to a Wall Street Journal article. US Federal Aviation Administration is reviewing software fixes, while travel bans due to coronavirus hinder cooperation efforts with international pilots and regulators.
Boeing suffered directly through increased costs, loss of sales and revenue, loss of reputation, litigation, customer compensation, reduced creditworthiness and reduced inventory value. In January 2020, the company estimated a loss of $ 18,4 billion for 2019, while reporting 183 canceled Max orders.
As if all this were not enough, in February 2020 the coronavirus pandemic hit the world and the following travel bans created further uncertainty and complications for Boeing. Thus, in March 2020, news that Boeing was seeking a $ 60 billion bailout caused its price to plummet. share which in April reached $ 134, losing more than two-thirds of its value since the beginning of March 2019 shortly before the 737 max was fixed, Reuters reports on April 22 - a price it has had since the world era economic recession in 2008-2009.
In fact, there are many analysts who predict that Boeing will follow in the footsteps of its main competitor, Airbus, which according to Reuters is studying scenarios of a 50% reduction in production. What does this mean in practice for the American company? Cuts and layoffs, as well as a reduction in production of 787 to 6 per month.
The blow was extended to the adjacent activities of the company - provision of aircraft parts and flight simulators, crew training, purchase of spare parts and aviation insurance.
In April 2020, according to Reuters, another blow is added to the already burdened financial history of the company. Company that buys large commercial aircraft and leases them to Airlines based in Kuwait is suing Boeing for refusing a refund of a $ 336 million canceled order for 40 aircraft in the troubled 737 max.
In a lawsuit filed in federal court in Chicago, ALAFCO Aviation Lease and Finance Co accused Boeing of violating the payment agreement, despite not being able to deliver the planes on time or provide a revised delivery schedule. . ALAFCO said it canceled its order on March 6 due to Boeing's failure to deliver 9 aircraft on time.
Η Boeing is an American aerospace company, the largest in the world, and the first to build commercial aircraft. It is also a leading manufacturer of military aircraft, helicopters, spacecraft and missiles - a feature that was greatly enhanced by the acquisition of Rockwell International Corporation in 1996 and its merger with McDonnell Douglas Corporation in 1997.
The company's military activities focus on the design, construction and support of fighter jets, bombers, transport, helicopters and missiles. Its products include, among others, the F-15 Eagle, F / A-18 Hornet and Super Hornet and AV-8 Harrier etc.
In the field of space and communications, Boeing is responsible for building Delta launch vehicles, the Inertial Upper Stage (IUS), a solid rocket booster in space, as well as rocket launchers for Delta launchers and other vehicles. Participates in development, ground operation and training activities for the US space shuttle fleet through the United Space Alliance, a joint venture with Lockheed Martin Corporation, and as a key contractor for the National Aeronautics and Space Administration (NASA) for the International Space Station, Boeing leads a team that includes most major US aerospace companies and hundreds of smaller suppliers.
Boeing's history began in 1916 when American industrialist William E. Boeing founded Aero Products in Seattle, Washington. Shortly before Conrad Westervelt they had managed to create the first seaplane, giving it the name "B&W".
In 1917 the company was renamed Boeing Airplane Company, with William Boeing forming the Boeing Airplane & Transport Corporation in 1928. In 1929 the company changed its name again to United Aircraft and Transport Corporation, taking several manufacturers under its umbrella. aircraft.
In 1931 the group merged its four smaller airlines into United Airlines, while in 1934 the need arose for aircraft to be built separately from air transport and therefore the Boeing Airplane Company became one of the three organizations resulting from the dissolution of United Airlines.
In 1960-1970 the company was active in various industries such as space travel, maritime spacecraft, energy production, etc. By 2019, it has developed more than 9 locations in the US (California, Washington, Texas, Missouri, Arizona, Oklahoma, etc.) employing approximately 150.000 employees in all categories of its activities.
While Boeing successfully sold its military aircraft, its commercial products lagged behind those of its competitors. So, to compete with them in the intense and expanding world market after World War II, he decided to develop a turbojet-powered aircraft with enough range to cross the North Atlantic.
After initial reluctance on the part of airlines at the time (most of which were committed to popular and less expensive competing aircraft), the legendary 707 four-wheel drive aircraft first became operational in 1958 on a pan-Atlantic transatlantic route. The aircraft quickly gained passengers, both with the shortest flight time and the smoothest route. This is the model that contributed to the air travel revolution.
The 707 was followed by the 727 trijet and the 737 twinjet, which were put into operation in 1964 and 1968, respectively. The 737 evolved into a modern family of airplanes and by the end of the 20th century had become the world's best-selling commercial aircraft. Its high development costs 747 Jumbo Jet, the world's first wide-body aircraft, almost forced Boeing to go bankrupt, but when the 400-seat aircraft became operational in 1970, it allowed airlines to offer affordable long-haul travel, giving Boeing a monopoly on this market share.