JS blocked

ATW Editor's Blog

Boeing knows its hardest cost is restoring confidence

RSS

Boeing will have been glad to get today behind it, the latest in a series of grim days since the second 737 MAX crash and the new narrowbody was grounded.

The manufacturer posted its 2019 first-quarter earnings Wednesday, the first such posting since the March 10 crash of an Ethiopian Airlines jet. As expected, the results broke an 11-quarter-long trend line of exceeding Wall Street estimates. The company remains profitable and financially strong—it’s a cash-rich, $100 billion company with a diversified portfolio and a backlog of more than 5,600 airliners worth $399 billion.

But Boeing will not give any more financial forecasts this year, indicating its own uncertainty on the true and final cost impact of the MAX crisis, which now involves two ongoing crash investigations, a recertification program and the cutting of the 737 monthly production rate from 52 to 42.

But the real unknown cost, as Boeing has started to acknowledge, will be what it takes to restore confidence in the MAX—a hugely successful aircraft in sales terms, with some 370 delivered and 5,000 sold.

As Boeing chairman and CEO Dennis Muilenburg said in a statement with Wednesday’s earnings release, the company must now re-earn the trust and confidence among its airline and leasing company customers, regulators worldwide, and the flying public.

Regardless of when the software fix is approved, or when the MAX groundings are lifted, the aircraft is unlikely to return to most airline schedules until well into the summer. Airlines have already taken the decision to keep their MAXs out of their schedules as far out as mid-August. On the face of it, that enables them to avoid more disruptions and uncertainty through the peak summer travel period. But it also buys them more time to formulate their communication plans to their passengers about why it is safe to fly the MAX.

Boeing will be expected to support its airline customers with those communications. Muilenberg indicated one line of thinking on the issue today when he told analysts, “we think a key voice in all of this will be the pilots. That bond between the passenger and the pilot is one that is critical.”

Boeing executives repeatedly stress that safety is, and always has been, the company’s number one priority. Sadly, and crucially, they now must prove it.

Karen Walker karen.walker@informa.com

Please or Register to post comments.

What's ATW Editor's Blog?

Karen Walker Blog

Blog Archive

We use cookies to improve your website experience. To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy. By continuing to use the website, you consent to our use of cookies.