MAX crisis throws Boeing into huge loss

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Singapore-Airshow-2020

MAX crisis throws Boeing into huge loss

The crisis at Boeing with its 737 MAX commercial aircraft is already rippling through the industry and could worsen after the manufacturing giant reported its biggest ever quarterly loss and said it may have to further slow or even shut down production of the plane upon which Boeing had bet its future.

On 24 July Boeing said it lost US$3.38 billion for the quarter ending June, on US$15.7 billion in revenue. The MAX has been grounded for more than four months after two crashes killed hundreds of people with the causes of both crashes being attributed to software originally designed to keep the plane from stalling.

“This is a defining moment for Boeing, and we’re committed to coming through this challenging time better and stronger as a company,” chief executive Dennis Muilenburg said.

Regulators around the world have not indicated when or even if they will allow the planes to fly again, and Boeing executives emphasised the timeline could slip further depending on regulators’ decisions. Airlines are assuming the crisis will continue late into the fall, cancelling hundreds of flights every day.

The 737 MAX was sold by the thousands to airlines around the world as an updated version of the workhorse of the industry with new engines that made the plane more fuel efficient. Because of the new engines and their affects on the plane however, Boeing added a new flight control system called the Manoeuvring Characteristics Augmentation System, or MCAS. That system was designed to make the plane behave as similarly as possible to past models, with minimal new training for pilots. It was later discovered that the system can override pilots’ manual controls in certain rare but dangerous situations, pushing the plane into a nose-dive.

These problems played a role in the October 2018 crash of a 737 Max 8 that killed 189 people in Indonesia, according to investigation reports and Boeing executives. Then, in March, another Max 8 crashed under similar circumstances, killing 157 people.

Prior to its earnings call, Boeing reported a US$5.6 billion charge needed to compensate 737 MAX customers. It faces lawsuits from the family members of the 346 people who died aboard the doomed Indonesia and Ethiopia flights.

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