I’m not going to pretend to know how much of this article in the Seattle Times is correct, but if even most of the information ends up being true, then Boeing has cost itself millions (perhaps billions) of dollars in lawsuit settlements, adjustments, new guarantees, and reputation.
The single Lion Air plane crashing due to the 737 MAX systems would have been bad enough, but with the data from that crash, and then a second crash having a similar issue, this is going to be devastating.
When the Lion Air crash occurred the results of the analysis were that the pilots were fighting a new automated system put in by Boeing as part of its efforts to make the 737 MAX comparable in flight to the earlier 737. That way, it required no new pilot training and made it much cheaper for airlines purchase and integrate the planes into their fleet.
That probably would have been a distressing, but ultimately not too impactful of event. Unfortunately, Boeing’s ham-handed handling of the aftermath may cost the company billions of dollars in legal fees, settlements, and new regulatory requirements.
Ethiopia Airlines Crash
After the Lion Air crash, Boeing essentially blamed the pilots. They also put out a bit of extra training and information. This could have all been swept under the rug thanks to America’s pull in worldwide aviation, and its huge lobbying efforts and campaign contributions ensuring the FAA wouldn’t bother investigating too much further, and give the company a slap on the wrist.
Indeed, this appears to have been the company’s plan. In the meantime, it worked on a fix for a problem it new existed. It would then roll out the fix with little fanfare as nothing more than an abundance of caution, and no one would ever be the wiser.
Then, the Ethiopia Air crash happened.
All indications point to a very similar problem with the same system the Lion Air had problems with.
What’s worse, is that according to the Seattle Times article, Boeing also rubber stamped its own safety analysis.
That’s really bad.
It also published false information about what exactly had been testified and certified.
That’s really, really bad.
And, you remember that fix? Now that fix is an admission that there was a problem and Boeing was happy to let pilots take their lives and the lives of their passengers into their own hands, until the fix was ready without telling anyone.
That is impossibly bad.
It doesn’t end there.
Thanks to revelations that the FAA certified the plane and its systems without doing its OWN tests — instead punting them to Boeing’s own workers — it gets more and more likely that new testing, and maybe new regulations will be required to return the planes to the sky. Remember, only America’s FAA runs based upon the whims of politicians eager to cut budgets, and force pre-determined conclusions based on campaign contributions. That won’t fly with the dozens of other countries that actually put their citizen’s safety above lobbyist’s wishes.
The former free pass that the FAA got from other countries as being the gold standard of aviation safety has been tainted, especially as it applies to Boeing and double, especially, as it applies to this plane. Indeed, Ethiopia chose to the send the flight’s black boxes to European regulators instead of U.S. regulators, in no small part to ensure that no back room, lobbying ended up keeping important information secret to save Boeing face, and by extension the FAA itself.
Boeing Stock Price
What does this all mean for Boeing’s stock price?
Well, in addition to the inevitable lawsuits, there are likely to be cancelled orders. Those that aren’t cancelled will come with demands that the safety systems be improved, re-tested, and re-certified, and NOT by Boeing and the FAA. Every bit of that costs money and delays. Oh, and if you happen to be an airline that hasn’t ordered any 737 MAX planes yet… why would you now… at least until that all gets sorted out, and you get assurances, and maybe even some free options… you know… for safety…