When an airplane carrying at least 150 people crashed in Ethiopia killing all people in a plane which was the second crashed in less than six months. This particular plane model which was involved in a catastrophic accident and these two disasters in such close proximity with the same plane. This kind of crash can lead to long-term trauma in people that affect socially and most importantly have an impact on Boeing 737 Max Airlines economically and dealing with such effects of such crash can be daunting.
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The economic crisis is a major effect from the plane crash that drop-in stock price or market valuation. There is still an investigation going on and much will depend on what investigators reveal about the 737 Max certification process. The results of the crash investigations and inquiries into the regulatory process could expose Boeing to an unusual amount of legal liability. Most airplane crashes are caused by pilot error, defective equipment, defective design or structural problem. It is slowing the production of its 737 Max jet. It had triggered a global grounding of the vaunted planes. After the two huge crash, the airlines are already facing about delaying or canceling deals to buy the 737 Max and Boeing are now under pressure from some airlines to compensate them for the cost of the grounded jets. The Ethiopian Airlines says that 737 Max 8s should be grounded including some 25 countries around the world are playing it safe, despite the FAA’s recommendations. Boeing has been through a tough month as they are facing a lawsuit and investigation which is a very serious problem for Boeing that might have long term impact.
Many countries had restricted the aircraft even before the U.S announcement. The company is facing lawsuits from surviving family members. In the short term, Boeing is facing the main four financial threats stemming from the crisis: the cost of fixing software for whole feet that are suspected of contributing to the crash, potential compensation to airlines to replace the 350 grounded 737 Max planes around the world, the cost of a delay in Boeings delivery of new Max jets, and the airlines cancellation. According to the New York Time, the Airlines such as Malaysia Airlines, Saudi Arabia’s fly deal, Lion Air the type of low-cost, emerging-market operators targeted by Boeing have all said they will seek to end 737 Max deals. Southwest Airlines which is one of a number of airlines that have waived cancellation and rebooking fees in response to the disruption. The airline Garuda Indonesia asked to cancel an order for 49 Max planes last month. The Max has been grounded, and Boeing paused deliveries of new planes, creating a backlog on its production lines in Renton, Wash. The company has been stockpiling finished planes in Renton and in nearby Seattle. Boeing shares have declined as much as 14% to the $363 range since the devastating Ethiopian Airlines crash of a Boeing 737 Max 8 aircraft.
“The company will reduce the rate at which it produces the 737 families of airplanes to 42 a month from 52”, Boeing’s chief executive, Dennis A. Muilenburg, said in a statement. The situation is a nightmare for Boeing as the aircraft manufacturer was working through more than 5,000 orders for the new plane, many of which for the airlines in the U.S and Asia. Future deals will also be affected by any perception of problems with the jet. The grounding of the aircraft by the U.S came after the decision of many other countries. While some members of Congress demanded that the Boeing Max Planes be grounded immediately, lawmakers from the states where Boeing facilities are based said they’d put their faith in regulators and the company. The U.S F.A. A had already issued an emergency order to ground the plane.
The emotional trauma that most people are facing who lost their loved ones in that plane crash is long lasting; their family is grieving that lead to pain and suffering, as well as the loss of companionship, emotional support, and guardianship. These kinds of crash can lead to a change in public perception and they might have the anxiety to travel from the plane. The plane crashes act as a triggering event, directing attention to the issue. The human tragedy is a major part of the story of the Boeing 737 Max. These kinds of aviation crash lose the trust of people and leave permanent scars on people who had lost their family members in the plane crash. When a devasting plane crash occur than people are worried about the airline’s safety management, resulting in social panic. The social influences and public perception of Boeing 737 Max crash are typically has appeared as arrogant and unresponsive. They are at risk of losing the confidence of customers, regulators, shareholders and the general public.
Empirical research from the Journal of Law and Economics and the University of Ljubljana have highlighted a significant negative impact between aircraft accidents and stock performance. The Boeing reputation has been greatly affected because of two crashes. The company finances will take a hot as it faces lawsuits from victim’s families, compensation claims from airlines. The grounding will have a far-reaching financial impact on Boeing, at least in the short term. There are more than 4,600 Boeing 737 Max 8 plane and won’t be delivered until Boeing has fixed any problem. The economic crisis is likely to be for Boeing in the long term. The FAA is recommended to temporarily suspend operations of the Boring 737 Max 8 plane. This can create a situation where regulators may have no better justification to get these aircrafts flying again in the future. The Boeing 737 Max is the fastest-selling plane in Boeing history, and they might need a replacement for 737 Max. They might face its worst crisis in years after two of its 737 Max planes crash. These two crashes have long term effect which could face absolutely devastation economic impact.
References
Chicago Tribune. “Timeline: Boeing 737 Max Jetliner Crashes and Aftermath.” Chicagotribune.com, 29 Apr. 2019, www.chicagotribune.com/business/ct-biz-viz-boeing-737-max-crash-timeline-04022019-story.html.
Sputnik. “FAA Holds Off on Grounding Boeing 737 Max Planes Citing ‘No Systemic’ Issues.” Sputnik International, 13 Mar. 2019, www.sputniknews.com/us/201903131073177998-FAA-Holds-Off-Grounding-Boeing-373Max-No-Issues/.
Admin. “Boeing 737 Max 8: Will Skittish Passengers Return?” Latest News CC, 8 Apr. 2019, www.atestnewscc.everythingrelationshipcc.com/boeing-737-max-8-will-skittish-passengers-return/.
Stempel, Jonathan. “Boeing Shareholders Sue over 737 MAX Crashes, Disclosures.” Reuters, Thomson Reuters, 10 Apr. 2019, www.reuters.com/article/us-ethiopia-airline-boeing-lawsuit-idUSKCN1RL31D.
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