Boeing’s 737 MAX Crisis is Airbus’ Lottery Ticket

It’s been over a year since the Boeing 737 MAX crashes. However, the company is still struggling with the aftershock.

What Happened?

A report by Reuters stated, citing a source, that Boeing is having discussions with banks to raise $10 billion or more because the company’s costs are rising.

How Did Boeing Get Here?

It all started with the 737 MAX crashing a couple of times and killing hundreds of people on board. After this incident, many countries grounded the 737 MAX flights and Boeing has projected that the grounding of the 737 MAX planes has cost the firm over $9 billion till date. Analysts project that the firm has been losing about $1 billion a month due to the grounding. Also, in October 2019, the Southwest Airlines Pilots Association said that it would sue Boeing for $100 million in lost income. On top of that, Boeing has already committed to paying out $5 billion after-tax in compensation to airlines.

Crisis For One, Profit For Another

When Boeing and Airbus released their delivery numbers, it was pretty evident who the winner was — It was Airbus. In 2019, Boeing’s overall net order figure for the year was -87 and it lost around $2.5 billion in orders for the year. Also, Boeing couldn’t deliver around 400 jets it built-in 2019. It won very few new orders and struggled with many cancellations. However, Airbus touched an all-time high in jet deliveries as it delivered a total of 863 jets and won 768 net new orders in 2019.

How Does The Future Look Like For Boeing?

Pretty gloomy at this point.

Another Reuters report stated that the Federal Aviation Administration is now unlikely to give approval of the 737 MAX’s return until March and it could take until April or longer. Last week, American Airlines Group Inc and Southwest Airlines said that they would extend cancellations of the plane till early June. Also in January 2020, the FAA and Boeing said they were analysing a wiring issue that may cause a short circuit on the 737 MAX. So, it really doesn’t look good for Boeing now and the company may need a couple of quarters and a lot of trust to come back on a strong note.