This year has been rough for Boeing (BA). While the stock has recovered 4.2% this month thanks to assertions of the 737 MAX’s comeback, Boeing stock has still fallen 16.2% since the Ethiopian Airlines crash on March 10. The MAX has been grounded since then.
The aircraft maker has lost billions of dollars in penalties due to the grounding. Airlines have suffered, too. Southwest Airlines (LUV) and American Airlines (AAL) estimate that the MAX grounding will dig a billion-dollar hole in their 2019 and 2020 finances. Southwest, which owns 34 MAX planes, has canceled over 40,000 flights due to the grounding. American Airlines holds 24 MAXs in its fleet, and has canceled over 20,000 flights due to the grounding. Southwest pilots have sued Boeing for loss of income and breach of trust.
Vendors that provide MAX components, such as General Electric (GE), have also been hurt. GE expects the MAX crisis to cost it $1.4 billion this year.
Boeing 737NG groundings continue
Boeing’s MAX crisis isn’t its only problem. Soon after Boeing CEO Dennis Muilenberg was grilled by Congress about the MAX crisis last week, Qantas Airways completed inspecting its Boeing 737NG (Next Generation) planes. Qantas subsequently grounded three planes due to cracks found in their “pickle fork” structure.
And now European carrier Ryanair has grounded at least three 737NGs in its fleet for the same problem. Ryanair, which owns over 400 NGs, is Europe’s biggest holder of the aircraft. Southwest Airlines is the world’s largest 737 customer, with almost 700 NGs and 34 MAXs in its fleet. Around the world, there have been around 50 groundings of 737NGs in the last few weeks.
The 787 has its own troubles
The 787 Dreamliner program has also hit roadblocks. Last month, Russia’s Aeroflot canceled a multibillion-dollar order for 22 Dreamliners. And more recently, BBC reports that retired quality control engineer and Boeing whistleblower John Barnett has alleged that 787’s oxygen masks may not work in certain situations, and that faulty parts have been deliberately used in planes.
Boeing’s long-haul program, the 777X, is running late. With its priority being to get the MAX back in the skies, Boeing pushed back the 777-9’s first flight after the Ethiopian Airlines crash. The 777X program was also delayed because of troubles with the GE9X engines that power the planes. The engine issues seem resolved now.
Where are you, 797?
In September, Delta Air Lines (DAL) CEO Ed Bastian told Bloomberg that the carrier is still hoping Boeing will build a new midmarket airplane, the 797. Although Boeing may defer the decision to build the 797 until the MAX’s comeback, airlines are looking forward to replacing their 757s and 767s. With no Boeing option yet, they may opt for Airbus aircraft. Loyal Boeing customer SpiceJet also said in September that it may order at least 100 Airbus (EASDY) A321s as the 737 MAX fiasco drags on.
Will Boeing lose market share?
In spite of the abovementioned problems, Donald Trump’s tariffs on Airbus might mean US airlines will have to choose Boeing anyway. However, this development could hurt BA’s international market share. If US operators choose Boeing over Airbus, BA may get busy at home and be forced to leave part of its share of the fast-growing Asia-Pacific market to Airbus.