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The Boeing 737 Max crisis

Boeing Still Has 737 MAX Issues

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What seems to have become an epic tragedy might turn into a financial disaster. Boeing’s 737 Max crashes have caused the death of 189 in Indonesia and 157 in Ethiopia and could cause the loss of $500 million to the company.

So far, regulators had identified an issue with Boeing’s navigating software and planes were grounded since March, it looks like the company has lost so far $400 million, only for the past three months. According to several experts, the crisis should stretch into next year.

The U.S. Federal Aviation Administration confirmed that the flight-control system – called CMAS – needs some strong fixing. At the moment Boeing has declared it was not safe for the planes to return for service. 

737 MAX’ absence is extended

It seems that Boeing will have to wait a little bit more to get back to business as usual. After the death of hundreds of people in two crashes earlier this year, the U.S. Federal Aviation Administration confirmed that the issue was linked to malfunction of the MCAS.

The MCAS is an emergency feature of the software that did not work both for the Ethiopian Airlines in Ethiopia and Lion Air flights in Indonesia.

This week, the company shared that its 157 planes in the United States models of the 737 MAX would have to remain grounded for an indefinite amount of time.

While it was planned for them to go back in service on October 1st, a top official from the U.S Federal Aviation Administration confirmed that the date is likely to pushed back.

“Boeing will not offer the 737 MAX for certification by the FAA until it’s safe return to service”, highlighted a Boeing’s press statement.

More than 30 authorities are involved

Jeffrey Guzzetti, a former director of the FAA’s accident investigation division, explained to CNN that the delay is “likely stem from the fact that the FAA and Boeing will need to get near simultaneous approval from authorities around the world for the plane to fly again”.

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At least 30 countries are involved as Boeing sold 80% of its 737 MAX model to companies across the world, totally 400 grounded jets owned by foreign carriers.

So far, 30 authorities are expected to set up meetings with the United States “to discuss the certification process”, confirmed CNN.

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Read on Alvexo: “Boeing Faces Historical Backlash After Double Crash”

Boeing will suffer severe losses

Not only these two crashes are the wort nightmare a plane manufacturer could ever think of, but the 737 MAX scandal might lead Boeing into a very challenging situation. So far, the company reportedly lost more than $400 million only for the two first quarters.

“They’re going to have to take on debt, eat into cash reserves,” concluded Jim Corridore, director of industrial equity research for CFRA Research. “As long as the plane comes back into service, the company will eventually be fine. And everyone expects that will happen. But whether it returns to normal in 2020 or not until 2021 is tough to say.”
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Although shares are up to 13% for this year, new orders have stopped while the company has kept on delivering older models, known for their safety. Yesterday, Boeing announced it would pay $100 million to the victims’ families.
Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.