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IF Insights: Discussing Boeing’s 2024 misfortune and its effect on aviation sector

In 2020, Boeing had to rectify the flaws around the 737 MAX and test-fly it rigorously to meet the safety parameters laid down by the aviation watchdogs

As the year 2024 kicked in, so did American aviation giant Boeing’s misfortune. In January, United States-based Alaska Airlines saw a horrifying mid-flight blowout of the part of one of its Boeing 737 MAX 9 jets, leading into a situation dubbed in the commercial aviation circle as an ‘explosive decompression’.

The incident saw the grounding of the 737 MAX family jets all across the world. During the fleet inspections, United Airlines found bolts around the airframe requiring ‘additional tightening’.

‘Installation issues’ in crucial areas like door plugs quickly drew the Federal Aviation Administration’s attention, with the American aviation watchdog now believing that the latest issue with the ‘cursed’ jetliner (which claimed the lives of 346 people between October 28, 2018, to March 10, 2019, in two crashes involving its much debated ‘Manoeuvring Characteristics Augmentation System’) is its structural integrity.

Since FAA’s intervention, things have gone downhill for Boeing.

Can Of Worms Open

Since its service induction in 2017, the aircraft type has been grounded globally twice, once in 2019 (due to the Lion Air and Ethiopian Airlines crashes) and now in 2024. In 2020, Boeing had to rectify the flaws around the 737 MAX and test-fly it rigorously to meet the safety parameters laid down by the aviation watchdogs.

Fast forward to 2024, Boeing is facing a similar misfortune, as the Alaska Airlines incident happened at a time when the planemaker had delivery orders of 4,000 737 MAX jets.

As per the United States National Transportation Safety Board, the door panel that flew off the Alaska Airlines flight was missing four key bolts. The FAA grounded 171 of the Boeing 737 MAX 9 planes in the United States. After clearing the inspections, most of these aircraft have been allowed to return to the service.

FAA is now working to upgrade its surveillance game around Boeing’s manufacturing and maintenance activities. Even Spirit AeroSystems, which makes the 737 fuselage, won’t be spared.

The watchdog deployed 20 inspectors at the factories of Boeing and Spirit, as a part of its six-week audit. The probe, however, did not reveal issues requiring immediate action.

Another research agency, called Mitre, has been given the task of reviewing the FAA practice of delegating some of the certification tasks to Boeing.

FAA previously underwent media glare involving the 737 MAX certification processes.

Boeing And Spirit Are In Tight Spot

Spirit has now decided to invest in autonomous technology to limit down the ‘human errors’ while manufacturing Boeing 737 fuselages, after identifying a new quality issue concerning poorly drilled holes on 737 window frames, which might force it and Boeing to undertake additional work on about 50 aircraft.

The venture has already paused 737 productions to stabilize operations, a move which will allow it to deliver 104 fuselages to Boeing, its highest quarterly total for 2023. Spirit delivered 356 737 fuselages in 2023, hitting its revised target of 345 to 360 units.

Boeing is also reportedly working with some companies to develop inspection plans that can cut down on defective parts moving up the supply chain.

As per Reuters, the venture has also asked one of its suppliers to halt shipments of the aircraft parts not fulfilling the operational specifications.

The Joe Biden administration has asked Boeing to cap 737 productions at the current rate of 38 jets a month for an undefined period.

Boeing also had to withdraw a request for a key safety exemption that could have allowed the American aviation regulators to speed up certification of its 737 MAX family jets.

The developments have tossed the anticipated timeline for the certification of MAX 7 and MAX 10 jets. The venture was eyeing the safety exemption to let the MAX 7 get certified before making design changes to the aircraft’s nacelle inlet structure and engine anti-ice system. The aviation giant originally proposed the MAX 7 exemption run through May 2026, as it had plans to develop and certify the required design changes, but things have changed now.

As per Richard Aboualfia of AeroDynamic Advisory, a delay of MAX 10 certification may push customers into the arms of Boeing’s arch-rival Airbus, further eroding Boeing’s 40% share of the narrow-body aircraft market.

Is The Aviation Sector In Crisis?

The boss of Emirates airline, which is also one of the major Boeing customers, has lashed out at the planemaker, saying that the venture is in the ‘last chance saloon’, with its performance witnessing ‘progressive decline’ in recent years.

Sir Tim Clark also stated that the Gulf carrier would send its engineers to monitor Boeing’s production lines.

In November 2023, the carrier placed an order for 95 wide-body Boeing 777 and 787 jets, valued at USD 52 billion at list prices.

Alaska Airlines Ben Minicucci told the NBC Nightly News, “I am angry. I’m more than frustrated and disappointed. I am angry.”

United Airlines CEO Scott Kirby said his business had experienced “a huge impact” from the 737-9 MAX grounding. The airline is the world’s largest 737-9 MAX operator, with the aircraft representing 8% of the American carrier’s capacity.

United had taken delivery of 20 Boeing MAX aircraft in 2023, with an additional 31 737 MAX 9 left to be delivered. The airline has also ordered 277 MAX 10 aircraft through the remainder of the decade. The grounding of MAX 9 and the continued supply chain issues will hurt the airline’s financial health, forcing the leadership to rework its fleet expansion plan.

However, Kirby clarified that United was not cancelling its 737 MAX 10 order as the venture was brainstorming the strategy around the aircraft, while accepting the truth that Boeing was likely to falter on its 737 MAX delivery commitments in the coming days.

Figuring Out The Future

As per the leasing firm Avolon, the aviation industry is already some 3,000 planes short, amid the increasing travel demand.

With FAA curbing Boeing’s production capacities, the industry stakeholders have now been forced to fly their older planes for longer, apart from facing engine shortages and other supply chain disruptions.

As per Reuters, airlines are buying the planes they had been renting rather than negotiating lease extensions. Over half of the global passenger fleet is lessor-owned and with the rise in the rental prices, things are becoming difficult for the industry.

Typical lease rates for a 10-year-old Boeing 737-800, which preceded the MAX, were around USD 220,000 per month in January 2024, up from USD 183,000 in January 2023, aviation analytics firm Cirium said. The leasing bills are still 5% below January 2020 levels, but by March 2024, will change and start hurting the airlines’ budgets.

Will Boeing get its house in order in the next few months? Failing to do so will ensure that the aviation industry, which is already undergoing supply chain chaos, falls into a gigantic sinkhole.

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