Boeing 737: Global Repercussions

The worldwide grounding of the Boeing 737 Max - after the Lion Air 610 and Ethiopian Air 302 crashes, is taking a toll on airlines and passengers. What are the impacts of this, and what options are available to Boeing?

Background 

Boeing 737 Max is a more fuel-efficient version of the workhorse single-aisle plane that has been in service since the 1960s. It is an airliner developed and manufactured by Boeing Commercial Airplanes and is the most produced commercial aeroplane in history. 

Over its 51 years, a total of 368 aviation accidents and incidents have occurred - including 184 hull losses resulting in over 5000 fatalities. In 2018, the crashes of Lion Air Flight 610 and Ethiopian Airlines 302 resulted in the grounding of Boeing 737 Max jets worldwide.

Analysis

Boeing, the US aerospace manufacturer, has reported its biggest quarterly loss ever due to the prolonged grounding of 737 Max jets. If there is further delay, Boeing has warned that it might have to reduce further or temporarily shut down production.

CEO of Boeing, Dennis Muilenburg, stated that the company planned to boost its production rate gradually to 57 a month in 2020 and any slippage in its estimated timing for a return to service could derail those plans. 

Before the crash, a faulty sensor in Lion Air 610 reported an imminent danger of aerodynamic stalling. The false report prompted an automated system known as the Maneuvering Characteristics Augmentation System (MCAS). MCAS is activated without the pilot's input and is designed to take readings from two sensors to determine how much the jet's nose is pointing up or down relative to oncoming airflow. If it detects that the aircraft is pointing up at a dangerous angle, it automatically adopts a corrective measure to push down the nose of the plane thereby preventing the aircraft from stalling. 

In Lion Air 610, with the information from the report, the system tried to automatically pitch the jet's nose down so that it could gain enough speed to fly safely.  

But Max jets are designed in such a way that the engines are larger, in order to increase fuel efficiency and they are positioned higher up on the plane's wings which has caused the jet's nose to pitch skyward. To compensate this Boeing added the MCAS system.  Not only does Boeing have to rework the "MCAS" anti-stall system implicated in the two crashes, but test pilots found another problem with the flight control system. The CEO said the company continued to work on software changes and expected to submit its "final certification package" to the Federal Aviation Administration. 

Following the grounding, Middle East's largest 737 Max customer, Flydubai with 251 orders and 14 already in its fleet, has cancelled 17% of its flying schedule. Oman Air, the national carrier of the Sultanate of Oman, has five MAX jets parked and orders for 25 more have recently been cancelled. Ryanair Holdings PLC, Europe's largest budget airline, said it expects a hit to its 2019 profits, and halved its summer 2020 passenger growth forecast to 3%.

"There is starting to be an impact on the winter schedules and 2020 plans," said Brendan Sobie, chief analyst at CAPA-Centre for Aviation in Singapore. That is "likely to be much more significant than what we have seen so far given the size of the [MAX] fleet wasn't that huge at the time of the grounding in March."

Assessment 

  • It is important to have a constructive debate about what degree of automation is safest for aeroplanes - and how much of control human pilots must maintain in an environment when aeroplanes have been loaded with electronics. 
  • Out of the nearly 43000 new aircraft that Boeing plans to sell in the next twenty years, Chinese airlines account for more than 20%.
  • The software problem - which in worst-case scenario could result in a full grounding and halt of deliveries of the 737 Max 8, could cost Boeing about $5 billion or 5 per cent of the company's annual revenue within two months. 
  • The five-month grounding has led to cancellations during peak travel periods. Passengers have to pay higher fares due to strong demand and constrained capacity. The airlines are also using less fuel-efficient flights and the launching of new international is going to be on hold.
  • There is an indefinite halt to commercial aircraft ordered which has led to a backlog of 4415 unfilled orders. It is likely that the costs incurred to deal with grounding, as well as compensation payments to victims families from both crashes is going to take a toll on the company.
  • We feel that to regain passenger confidence after a series of early safety issues, one option could be a conversion of the existing fleet to air freight carriers.

Read more

Image Courtesy: seattletimes.com 

 

 

 

 

Comments