(Updated at end to note New York Times report about problems at 787 Dreamliner plant in South Carolina.)
How bad has it gotten for Boeing Co. with the 737 Max mess? So bad, it’s having to stay quiet while a high-profile former airline CEO offers unsolicited advice.
“(I)f I were Boeing I would FIX the Boeing 737 MAX, add some additional great features, & REBRAND the plane with a new name,” President Donald Trump wrote in an April 15 post on Twitter. “No product has suffered like this one. But again, what the hell do I know?”
As a businessman, Trump ran the unprofitable Trump Shuttle from 1989 to 1992. But Boeing is in no position to quibble. Trump is the president and he’s got the world’s biggest bully pulpit. Meanwhile, Boeing has other damage to its image to consider.
Two fatal crashes of 737 Max aircraft in October 2018 and March 2019 have caused regulators around the globe to ground the plane. The 737 is the company’s biggest seller and the Max was intended to maintain Boeing’s competitive position. Boeing is trying to make a software fix to address issues in the two crashes.
However, things aren’t happening quickly. Any software fix will require regulatory approval. Additional pilot training may be required. One reason Boeing developed the 737 Max was to avoid training costs that would come had it developed a totally new model. The Max was considered an extension of the 737.
American Airlines said April 14 that it is extending its cancellations for Boeing 737 Max through Aug. 19, or well into the busy summer flying season.
American and other carriers with the 737 Max in their fleets have canceled flights, adding more stress for their customers to deal with. In American’s case, it says about 115 flights a day, or about 15 percent of its total flying, will be canceled through Aug. 19.
It may be a cliché, but it’s true. It takes years to build up a reputation. They can unravel quickly.
Brand Finance, a U.K. consulting company, said on March 27 that Boeing’s brand value would plummet by $7.5 billion as a result of the 737 Max being grounded. Brand Finance estimated the value of the brand at $32 billion on Jan. 1.
The Reuters news service asked Brand Finance to update its estimate. The company came back this week with a figure of $12 billion.
‘We Own It’
Boeing CEO Dennis Muilenberg put out a statement on April 5 outlining how it was coping with the crisis.
“Safety is our responsibility and we own it,” he said. “When the MAX returns to the skies, we’ve promised our airline customers and their passengers and crews that it will be as safe as any airplane every to fly.”
Nice words. But until the fix is implemented, they are only words.
Boeing is scheduled to report first-quarter earnings later this month. That will provide a snapshot of the financial impact so far.
That will be key information. But it will only be one piece of a very large, very complex puzzle. In the meantime, presidential tweets, flight cancellations and other events demonstrate the stress on Boeing’s reputation and image following hundreds of deaths.
UPDATE (April 22): Things just even worse for Boeing. The New York Times, in an April 20 story, reported that the company’s 787 Dreamliner factory in South Carolina “has been plagued by shoddy production and weak oversight that have threatened to compromise safety.”
The newspaper said it reviewed hundreds of pages of company e-mails, documents and federal records. The Times also interviewed current and former Boeing employees. The publication summarized its findings as showing “a culture that often valued production speed over quality. ”
Boeing, in a statement, disputed that, saying its South Carolina employees are “producing the highest levels of quality in our history.”
Nevertheless, the Times story is another blow to Boeing’s image at a time it really can’t afford it because of the 737 Max situation.