Boeing in Hot Water

The United States recently became the last country to ground the Boeing 737 Max aircraft. This decision comes after days of mounting pressure by the public and the government to investigate and evaluate the processes behind the aircraft, and why the two most recent crashes have been eerily similar in their causation.

This incident alone has resulting in Boeing going on the defensive with the public and the media. Their stock has dropped 11% and they have lost nearly $29 billion in market value. Such an economic hit is indicative of a need for sweeping process change within the company, both in terms of plane assembly and testing before they are used by companies. The issue is, many plane orders and contracts are usually old, and often take years to complete. However, many airlines, including Norwegian Airlines, are demanding compensation from Boeing for revenues lost due to the sudden grounding of those planes. The issue is becoming increasingly costly for Boeing, but its own mistakes are farther reaching than that.

Boeing is also a government contractor for the Air force, being that they are a top competitor in the airline industry. They, for example are the only company capable of constructing the 737 Max, but when it comes to military tankers, the story gets a bit more complicated. Following the two aforementioned crashes, the USAF had its confidence in Boeing shaken as their KC-46 tanker (plane used to refuel other jets) was found to be malfunctioning, and inspectors were finding Foreign Object Debris (FOD).

The USAF described the issue as part of an assembly line culture that that left assembly tools to be left in the tanker, after the order was delayed almost two years. Such a simple problem left officials worried as it pointed to a problem with the very mechanical processes the company uses. They knew of development issues that hampered the company over the past two years and correcting these issues could cost Boeing an additional $3 billion.

Customers and clients of the company seems to be angry at their losses due to grounded flights, the government has become wary of the company’s processes and may discontinue working with them, and the public’s perception of flying a Boeing aircraft is tainted by this incident. These perceptions (that this debacle has created) may not go away anytime soon, and the losses companies are taking as a result may not ever be repaid.