The investigation into the crash on Sunday of a Boeing 737 Max jet may take weeks to provide clarity on the exact cause of the tragic accident, but the story of the aircraft model has already prompted widespread outrage and allegations of gross negligence.
And following the worldwide grounding of all Max jets, as well as Boeing’s decision on Thursday to suspend delivery of the planes, the short-term financial cost of failing to address safety concerns is mounting.
Delivery of the fast-selling passenger jets was already effectively halted by the grounding, but the plane maker will now have to find space to store them as they will continue to produce new units.
“We continue to build 737 MAX airplanes while assessing how the situation, including potential capacity constraints, will impact our production system,” Boeing spokesman Chaz Bickers said. The model accounts for an increasing share of Boeing sales – around one third – with nearly 600 jets slated to be delivered this year. Almost 5,000 are on back order.
It is unclear how long aviation regulators will keep the planes out of service. The grounding of Boeing’s 787 Dreamliner in 2013 lasted more than three months.
Analysts expect that Boeing will potentially incur costs in the neighborhood of hundreds of millions of dollars to compensate airlines that have seen disrupted service.
Negligence
The long-term reputational cost is harder to quantify. Accounts of the development and rollout of the Max support allegations that have been made in lawsuits against Boeing of gross negligence.
The company was already well aware of problems with the design of the plane – a fact that was also exposed following the crash of another one of the aircraft in October. In the case of that Lion Air flight, an investigation determined that pilots were unprepared for dealing with software unique to the plane, intended to compensate for a critical design flaw.
In their quest to create a more fuel efficient plane with the least amount of effort, Boeing engineers opted for upgrading the 50 year-old 737 instead of developing a replacement. This allowed them to bypass the stringent testing requirements required to introduce an entirely new model.
The enlarged engine in the Max changed the aircraft’s center of gravity and created a tendency for the nose of the plane to pitch upward, an unfortunate byproduct that was fixed with a software update that would automatically push the nose of the plane down if sensors detected the problem.
Lawsuits
But the company declined to train pilots to deal with the issue, citing fears about “inundating average pilots with too much information—and significantly more technical data—than they needed or could digest,” The Wall Street Journal reported in November.
Several families of victims of the Lion Air crash have filed lawsuits against Boeing, including one lawsuit filed just days before Sunday’s Ethiopian Air accident.
“It was like Boeing first blindfolded and then tied the hands of the pilots,” said Thomas Demetrio, an attorney representing one family that filed suit in December.
“This will be a large financial loss,” said Pete Flowers, who has also filed a suit against Boeing on behalf of a Lion Air crash victim’s family, per Law.com. “The claims against Boeing are going to be enormous overall. There’s going to be a lot at stake here.”
Flowers said he plans to file a suit over the Ethiopian Air crash within days.
The financial blow to Boeing will not be an insurmountable challenge. According to Barclays, the costs associated with the incident could tally upwards of $1 billion. But even after shares of the firm plunged this week, the company still boasts a market cap in excess of $200 billion.
And the popularity of its planes among airlines persists, as Lufthansa demonstrated with a purchase of 20 787 Dreamliners this week in the wake of the crash.
Nonetheless, regaining the trust of airline crew and passengers is a different challenge entirely.