After two crashes in the Java Sea near Indonesia and Ethiopia involving Boeing’s 737 Max line of passenger jets killed a total of 346 people, sales of 737 Max models have plummeted, CNN reported on Tuesday.
A company report says that Boeing has not sold a single new 737 Max aircraft since the line was grounded on March 13, while April also saw no new sales of other Boeing jets “such as the 787 Dreamliner or the 777,” CNN wrote. The report suggests that potential customers have grown wary about the wisdom of buying 737 Max aircraft, and have held off on buying other Boeing models that were not involved in crashes as well:
Boeing (BA) did report some orders for the other jets in late March, even in the wake of the March 10 crash of an Ethiopian Airlines jet and the grounding of the 737 Max that followed. Lufthansa ordered 20 of the 787 jets on March 15, and British Airways ordered 18 of the 777X on March 22.
But the only orders reported by Boeing for April were bookkeeping entries: Four 737 Max jets that had been sold to Boeing Capital in the past were transferred to an unidentified lessor last month. Boeing didn’t count those as new orders. Instead, it reclassified sales it had already reported in the first quarter.
However, safety concerns are likely far from the only factor behind the sales slump.
Standard & Poor’s transportation sector lead credit analyst Philip Baggaley told CNN he believed it was possible airlines believe the crashes – and subsequent groundings that are reportedly costing airlines hundreds of millions of dollars – have strengthened their bargaining position. Baggaley told the network any agreement Boeing reaches with the airlines over the groundings may not take the form of a “straight cash compensation,” and may instead involve “lower price on future orders, or some other change in those orders. There could be things going on behind the scenes that could essentially turn into orders.”
Additionally, CNN wrote that airlines already have a massive backlog of orders from Boeing and competitor Airbus, and both companies had bad first-quarter sales showings in part due to that. Boeing has continued to manufacture new jets to fill prior orders.
The two crashes are both believed to have involved issues with two 737 Max systems: The angle of attack sensors, which indirectly measure the amount of lift generated by a plane’s wings, and the Maneuvering Characteristics Augmentation System (MCAS), an anti-stalling system implemented due to changes in engine placement in the new aircraft. If the sensors feed bad data into MCAS, the system could automatically trigger, potentially sending the plane into a nosedive.
Preliminary signs are that pilots on the two flights repeatedly struggled with MCAS to regain control of the planes. The exact degree to which pilot error may have been a factor remains unclear and likely will remain so until final reports are issued, but according to CBS, those errors probably would not have been a factor had there not been “clear and fundamental flaws” in the MCAS design.
In the meantime, backlash against the aerospace manufacturer has been mounting. The company only offered critical safety features that could have alerted pilots to a sensor malfunction as optional upgrades. Other reports have indicated flight crews may not have been aware the systems were not operational by default or otherwise received insufficient training.
Boeing has announced a software fix to MCAS that the Federal Aviation Administration characterised last month as “operationally suitable,” as well as said it would install some of the safety features previously offered as optional upgrades as default features in all 737 Max jets. But that fix has not yet been approved and the groundings have continued, with the planes starting to pile up at storage sites.
Boeing and the FAA are also facing increasing scrutiny of whether regulators failed to flag potential issues with the aircraft’s design, as well as whether Boeing should have responded more aggressively after the first crash, according to reports in the New York Times and the Wall Street Journal. Boeing insiders also reportedly called an FAA hotline to report issues with the 737 Max line after the second crash, including a previously unknown issue involving a “foreign object” that damaged wiring attached to an angle of attack sensor. [CNN]
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