In 2018, a Lion Air Boeing 737 MAX crashed in Indonesia as a consequence of a sensor that was incorrectly set up. 189 passengers died. In 2019, another Boeing 737 MAX crashed and 157 passengers died in Ethiopia. Test pilots discovered that the automated safety system pushed the nose of the plane down, but they could not do anything about it. The pilots of the Lion Air 737 MAX did 22 attempts to push the nose upwards, but in their instruction manual was nothing written about the new software system MCAS. The American aviation authority FAA agreed when Boeing omitted the system from the manual. After these crashes, many countries decided to ban this aircraft out of the airspace. After 346 deaths, the aircraft was no longer considered to be safe by the American aviation authority FAA. A pilot who was engaged in the process, communicated in 2017 that the plane was ‘designed by clowns supervised by monkeys’. Another employee wrote in 2018, months before the first disaster, that he wouldn’t let his family fly on the 737 MAX. Forbes, an American magazine, discovered that Boeing had convinced the airline company Lion Air not to give their pilots an additional training to fly on the plane. Lion Air was planning to obligate a simulation practice, a costly process. Boeing feared that other airline companies wanted to have a training, which makes this type less interesting for sale. In the end, a Lion Air 737 MAX crashed… Now, Boeing advises pilots to follow a training.
After the second disaster, the aircraft was grounded worldwide. The 737 MAX is only allowed to fly if the American authority FAA gives permission. However, a new error in the software has been discovered by Boeing. This may lead to an additional delay. Boeing communicated that they are working on new updates. Currently, 400 new exemplars are ready for sale, but they can not be delivered because of the flight ban. From this month, Boeing stops the production of this type temporarily. Boeing produced 42 exemplars a month. The problems with the 737 MAX have already cost Boeing more than 9 billion dollar. In an attempt to recover the trust, Boeing fired its CEO Dennis Muilenburg. He does not get a dismissal premium, but he gets 55 million euros wage compensation. Furthermore, the production stop has consequences for the American economy. Boeing has 4600 orders for this type. Since these crisis, the value of the shares of Boeing has decreased with approximately 20%. In the last quarter, the profit has decreased with 43% compared to the same period in 2018. In addition, the revenues decreased with 21%. Former CEO Muilenburg communicated in October that he expected permission from the FAA at the end of 2019. This turned out to be incorrect. Besides, other companies are affected by the production stop. For example, the value of the shares in Spirit AeroSystems, the company that produces the hull of these planes, have decreased. The firm fired 2800 employees. The 737 MAX generated 50% of their revenues. It is also a setback for General Electric and the French firm Safran, which are responsible for the engines.
Likewise, different airlines are affected. The flight ban for the 737 MAX led to additional costs for TUI: 293 million euro. 15 airplanes are grounded, while 57 airplanes have been ordered at Boeing. The operating result of TUI was 893 billion instead of 1.183 billion in 2018. If the plane is allowed to fly again at the end of April 2020, TUI expects that the additional costs will be ‘only’ 130 billion. But if it still takes until the end of September, TUI expects to have additional costs of 220 till 270 billion. The crisis has consequences for Ryanair too. The airline closes its pitches this summer at Stockholm Skavsta and Neurenberg because of a shortage of aircrafts. Ryanair expected twenty airplanes, but the firm expects that only ten airplanes will be delivered. According to CEO O’Leary, Ryanair actually needs this summer 58 airplanes. Ryanair expects to end the next financial year with 156 million travellers: one million less than planned. Furthermore, the airline must cancel some flights. The firm ordered 135 aircrafts, but it still has not received anything yet. Transavia keeps an eye on the situation. It is no secret that the Dutch airline is planning to refresh their 737-fleet. In the largest variant of the 737 MAX, 200 travellers can take a seat: more than in the Boeing 737-800. If the 737 MAX is considered as safe, Transavia is planning to order some airplanes. The type is much more economical and quiet, causing Transavia to fly cheaper. Schiphol gives the quietest category of airplanes a discount. So, it is important for a lot of companies worldwide that the problems with the 737 MAX will be resolved quickly and that the type gets approved by the aviation authorities. However, the question is whether there are people who still want to board on this plane.
By: Kelly Veldman