The Tribune

ACTIVTRADES WEEKLY

By RICARDO EVANGELISTA

www.activtrades.bs

On 29 October 2018 an aircraft flying for Indonesian carrier Lion Air, crashed into the Java sea only thirteen minutes after taking off from the Jakarta International Airport, killing all 189 passengers and crew members on board. Less than five months later, on 10 March 2019, Ethiopian Airlines flight 302 took off from Addis Ababa International with 157 people aboard. Six minutes later the plane crashed. There were no survivors. Both crashes involved brand new airplanes and happened within minutes of taking off. Also, the same aircraft model was involved: Boeing’s recently launched 737 MAX.

The 737 MAX series of airplanes is the American giant plane maker’s latest version of the world’s most successful narrow body aircraft, of which more than 10,500 units have been delivered to airlines around the world since it first entered service in February 1968. Throughout the last fifty years several new editions of the 737 saw its body length stretched, the wings were redesigned, and the old jet engines replaced by larger and more powerful turbofans. The maximum carrying capacity also increased, from the original 85 passengers to a current maximum of 215. So many changes on top of a 50-year-old legacy structure means that the latest 737 version’s ability to stay in the air depends on sophisticated software that works to compensate its deficient balance.

After the Lion Air and Ethiopian Airlines crashes, the initial reports from the investigating teams, which in both cases operated in partnership with the American Federal Aviation Authority, pointed at human error as the most likely cause for the accidents. However, it soon became apparent that the real reason was a software malfunction and airlines around the world started to ground their 737 MAX fleets. Orders were cancelled or put on hold and finally, on 26 November 2019, the FAA revoked Boeing’s authorization to issue airworthiness certificates for the 737 MAX.

The coronavirus impact on the travel industry has been brutal. From cruise liners to hotels, 2020 has been the most challenging year in living memory. Aircraft manufacturers also suffered, due to order cancelations by struggling airlines and the drying up of new business in the market. For Boeing the crisis was amplified by the grounding of its best-selling product, which seriously dented the firm’s reputation and even threatened its future viability. However, after a very difficult couple of years, during which its stock market value depreciated by almost 70%, the wind has finally changed, and things are starting to look better for the giant American corporation.

In November the Federal Aviation Authority declared the jet safe to fly again, with other regulators expected to soon follow suit. And, last Thursday, in a multibillion-dollar deal, Ryanair, Europe’s largest budget airline, placed an order for 75 new 737 MAX airplanes. This could be the beginning of the troubled aircraft’s rehabilitation, and a return to normality for Boeing, as Investors also reacted to the stream of good news and started to price-in the brighter prospects, with the stock value rising by more than 60% over the last five weeks.