In another setback, Boeing’s (BA) long-haul and wide-body 777X variant failed a stress test. The test was part of the FAA’s certification process. Overall, the test was designed to see how the plane functions under a heavy load. The Seattle Times reported that the test plane’s door blew out during a heavy load test. In July, Boeing pushed back the 777X deliveries due to problems with General Electric’s (GE) GE-9X engines. General Electric claims that the GE9X engine will be the most fuel-efficient engine among its product range. The company is facing allegations of an accounting scandal from Harry Markopolos—the Madoff whistle-blower.
More troubles for Boeing’s 737 MAX 8
The current troubles with Boeing’s 777X add to the company’s misery. Boeing wants to please regulators and bring its 737 MAX 8 aircraft back into service.
As my colleague Anirudha Bhagat wrote last week, Boeing’s 737 MAX has repeatedly failed to please the FAA and other regulators. Even the International Air Transport Association expressed concerns about regulatory confusion around the world regarding the 737 MAX 8. Globally, the plane has been grounded since March. There were two fatal accidents within that killed all of the 346 people on board. While the plane was expected to be back in service in the fourth quarter, Boeing might miss the deadline.
Boeing’s reputation is also at stake. Airlines have canceled thousands of flights since the 737 MAX grounding started. The grounding has cost Boeing over $8 billion in compensation. More delays mean that the company will have to pay more compensation to airlines. A Russian aircraft leasing company sued Boeing to cancel its 737 MAX 8 order.
What’s Boeing doing to tackle the issues?
Boeing has taken up several steps to improve its systems so that the 737 MAX can return to service. In July, Boeing made a leadership change in its 737 projects. The company’s internal panel suggested certain structural changes to strengthen the oversight.
To avoid a communication failure and create an avenue to alert senior management about safety concerns, Boeing might have to reorganize its engineering team. The panel also recommended creating a committee to oversee the design and development of Boeing planes.
An advantage for Airbus?
Boeing’s 777X competes directly with the Airbus A350 (EADSY). Over the last few months, Airbus benefited from Boeing’s troubles. Until August, Airbus delivered 500 planes—66 more than the same period last year. On the other hand, Boeing has delivered substantially fewer planes compared to last year. Until July, Boeing delivered 258 planes.
Boeing is still manufacturing 42 737 MAX 8 planes per month to maintain an inventory so that it can start shipping planes as soon as it gets approval. However, the delayed approval means that A320s will continue to be a favorite among airlines.
Boeing stock fell
Boeing stock has the opposite problem to the 737 MAX 8. The 737 MAX 8 glitch forced the aircraft’s nose down, which caused two fatal crashes.
Since the Ethiopian Airlines crash on March 10, Boeing stock has fallen 14.1%. During the same period, the Dow Jones Index (DIA) has risen 5.3%. The stock fell 0.95% in pre-market trading today at 7 AM ET.
General Electric, which fits engines in Boeing’s planes, has lost more than 9% since March 10. All of the losses have come since August.
Correction: An earlier version of this article suggested that the 737 MAX 8 glitch lifted the aircraft’s nose. The glitch forced the aircraft’s nose down.