Did corporate greed override passenger safety at Boeing?


The aviation industry, considered the safest mode of transport due to the few incidences of accidents has recently had its fair share of tragic events in late 2018 and early 2019. Specifically, the Ethiopian Airways (ET) flight 302 and Lion Air of Indonesia crash that led to a loss of 346 lives directs the spotlight to Boeing and specifically their upgraded single-aisle 737 Max planes.

“I can assure you the 737 Max will be back in the air soon. They will find a solution to the ‘problem’, issue an AD, (A compulsory Airworthiness Directive detailing a modification/improvement clear guideline of implementation) and after that the plane will be back in service.” said Mr Dan Opata, an aeronautical engineer, admiting that a majority of airlines were struggling to break even due to high cost of fuel. Mr. Opata, like several aviation experts describes the Max planes as very fuel efficient and comfortable and that once the glitch is resolved they will be back in the air.

The 737 Max model, hailed as more fuel efficient and longer-range accounted for more than half of the 580 737 models produced in 2018

Interestingly, Boeing is alleged to have concealed vital information (flight control systems) on its Max models, which are reliably linked to the crashes. This is an illustration of corporate greed for a company that is definitely conquering the skies in airplane deliveries against her closest European based rivals, Airbus. Is the urgency to deliver planes to clients in time worth compromising the safety of passengers? The company’s chief financial officer Gregory Smith had revealed that their 2019 projections were that the Max model would account for 90% of their to-be-delivered planes.

According to Natalie Kitroeff of the New York Times, in 2013 when Boeing’s Dreamliner planes were grounded, the company spent $20 million (Sh2b) and some three months to fix the problem. The full effect of the grounding of the 737 Max jets is yet to be quantified and is unimaginable; an 11% drop in Boeing shares immediately after the ET Airline crash on March 10, 2019, is just a tip of the iceberg.

Airlines that have grounded the planes are now seeking compensation. According to Carter Copeland, an analyst at Melius Research, it costs around $1 million (Sh1b) to lease a replacement jet for three months. There is also fear of lawsuits by families of the plane crash victims. He however, quells fears of airlines canceling orders reason being that airlines mainly make a 20% deposit for plane orders which is usually paid over time hence it is difficult to get themselves out of these commitments without solid evidence of structural problems with the aircraft.

Boeing’s plane delivery dominance

In December 2018, Boeing, according their website, had delivered 69 B737 against a total monthly delivery of 203 planes; and subsequently setting an annual record of 806 deliveries up from 763 planes in 2017.

“In a dynamic year, our production discipline and our supplier partners helped us build and deliver more airplanes than ever before to satisfy the strong demand for air travel across the globe,” said Kevin McAllister, Boeing Commercial Airplanes President & CEO.

By mid 2018, Boeing was producing 52 airplanes of the 737 model in a month. The 737 Max model, hailed as more fuel efficient and longer-range accounted for more than half of the 580 737 models produced in 2018. The company achieved, if you use the list prices of the planes, 893 net orders for planes valued at $143.7 billion. Compare to 747 net orders by its major rival and European airplanes manufacturer Airbus, a drop in orders in 2018 after having a total of 1,109 net orders in 2017.

Corporate greed?

Wall Street firms Melius Research and Jefferies admit that Boing has the financial muscle to accommodate the grounding of their B737 Max planes. This isn’t new in the first place, in 2013, Boeing told airlines not to fly the 787 Dreamliners when the planes’ batteries were catching fires. The only worry to them is how long it may take to resolve the issue surrounding the B737 Max planes. In 2018, Boeing posted revenues of $101 billion and a $10.6 billion profit; leave alone their dominance of plane deliveries over their archrivals Airbus a illustrated above. This is against an estimated $1billion to $5billion, which might be the cost of grounding the planes

The US Government was quoted as saying that Boeing engaged in concerted actions to conceal, deny and downplay the hazards and safety concerns, in violation of federal regulations presented by the Boeing 737 Max 8’s new features. Also telling was the reluctance by Boeing to ground the planes when the ET flight crashed and only acted when major airlines including China started grounding them. China, according to Reuters has a fleet of 97 Boeing Max 8 planes making it Boeing’s single largest client, followed by the USA with 58 Max8 and 14 Max9 models.

As a solution to the flight control system is being worked on, lives were lost and negligence on the part of Boeing can be seen. One only hopes that corporate greed does not avail its ugly head over the safety of travelers.

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