Is this the end for the B737MAX?
It’s been six months now since ET302 Ethiopian Airlines crashed into the African savannah. We have a thought for the victims of this flight as well as those for the flight Lion Air 610.
The damage
Six months during which Boeing’s name was regularly dragged in the mud. On May 6, the title of our text on the MAX was: “MaxGate, the cup runs over“; but far from stopping, revelations about Boeing and the MAX continued throughout the summer. If we still cannot measure it accurately, the damage to Boeing’s reputation is obvious.
The first contractual damages should occur in October; some MAX customers have a cancellation clause after six months of late deliveries. Boeing specifies the delivery month in its contracts, not the day; the first cancellation clauses therefore take effect in October. Note that not all customers have this cancellation clause, but only about 25%. In times of growth Boeing would not have much to fear since companies need planes. But the word recession has appeared in the headlines for a few months, so some airlines will probably take the opportunity to reduce new aircraft orders.
EASA
But Boeing’s biggest problem right now is that it has lost all its credibility with the certification agencies. Here is an obvious example that EASA does not trust Boeing anymore; it requires to test the MAX with the MCAS disabled and at the limits of the flight envelope. This request raises doubts about the MAX’s ability to behave normally during critical conditions. If the MAX failed this test, it’s type certificate would be at stake.
The consequence
Regardless of the different scenarios, the MAX will not return in flight until the beginning of the second quarter of 2020. By then, the airlines will get impatient, the criminal investigations might be concluded and the production of the MAX will stop. In fact, with every passing week, with every new revelation, the market value of the MAX approaches zero. The market might do what Boeing refuses to: put an end to the MAX.
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