The 737 Max 8 has been the best-selling Boeing aircraft, but now China, Indonesia and several airlines have grounded the planes. What does this all mean for Boeing?
MARY LOUISE KELLY, HOST:
Meanwhile, a lot of eyes are turning towards Boeing, which built the planes involved in both the Ethiopian air crash and that Lion Air crash in Indonesia less than five months ago. This morning, Boeing’s stock tanked 12 percent before recovering much of that ground. NPR’s Camila Domonoske has been looking at what all of this means for Boeing. She’s in the studio. Hey, Camila.
CAMILA DOMONOSKE, BYLINE: Hi.
KELLY: So what has been the official response from Boeing?
DOMONOSKE: The company expressed, quote, “heartfelt sympathies” and is sending a technicals team to the crash site to help investigate. Boeing says, quote, “based on the information available, we do not have any basis to issue new guidance to operators.” And internally, the CEO sent a letter to staff encouraging them to stay focused and saying he’s confident in the safety of this model of plane.
KELLY: And talk to me about this specific model. This was the Boeing 737 MAX 8, a very important plane for Boeing. They’ve got a lot riding on it.
DOMONOSKE: Yeah. The 737 MAX, like you heard Russell explain, is a more fuel-efficient version of this pre-existing plane that’s very popular, the 737. So this new version has been even more popular. It’s the fastest-selling plane the Boeing’s ever had, more than 350 delivered so far. But some 5,000 orders are in, so there’s going to be even more of these planes in the air in the future. And Boeing needed this version of the plane in order to compete with a fuel-efficient plane from its European rival Airbus. About a year ago, Boeing CEO Dennis Muilenburg said he was feeling bullish about the 737 MAX.
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DENNIS MUILENBURG: The airplane is performing well in the field. Reliability for the fleet in the field is very high, so we’re pleased with the performance of the program.
DOMONOSKE: So reliable – sales and production since then kept going up and up. Boeing was making a ton of money off of this plane. It looked great. But now with two deadly crashes in just a few months, it’s a really different picture.
KELLY: And a really complicated picture. I mean, the scale of this is enormous. Boeing is America’s biggest exporter. Is that right?
DOMONOSKE: Yeah, period, across all sectors. The company employs more than 150,000 people worldwide. It’s got more than a hundred billion in revenue last year. And the company has been doing really, really well in large part because of the success of this 737 MAX model.
So then cut to today. This morning, the Dow Jones Industrial Average took a dip, and people pointed to Boeing. The company’s success had been driving the Dow up, and when it went down, it weighed down the entire average although the Dow did manage to close higher today.
KELLY: Next steps for Boeing – do we know?
DOMONOSKE: Yeah, well, we now know that the company was already working on a design change as part of the FAA’s investigation into the earlier crash. We don’t know yet whether there will be any more updates as a result of this more recent crash. But big picture, Boeing has to prove that these planes are safe. There have been hundreds of thousands of safe flights. But the focus now of course is on these two crashes. I spoke with aviation analyst Richard Aboulafia, who says these terrible crashes probably aren’t going to cause a sudden change to Boeing’s sales. You have to consider these planes are ordered years in advance.
RICHARD ABOULAFIA: If it is the worst-case scenario and it’s the same as Lion Air, they could be looking at a very expensive bill. But in the broader context, the sheer scale of their business and the profitability of their business, it’s not going to sink the company.
DOMONOSKE: But in the short term, people are very alarmed. You know, there have been groundings of these planes across the country – China, Indonesia in particular. And some passengers are worried enough that they’re trying to rebook their flights although, again, to emphasize, we don’t know what happened in the Ethiopian Airlines crash.
KELLY: And, again to emphasize, so far here in the U.S., these planes are not grounded.
DOMONOSKE: That’s right.
KELLY: All right.
DOMONOSKE: They’re still flying.
KELLY: NPR’s Camila Domonoske.
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