Boeing’s problem with the 737 Max

It’s not so much that they’ve got to – or someone does – to the families of those who died It’s that there’s also a liability to those who cannot use the panes they’ve bought.

That Boeing (NYSE:BA) has a problem with the 737 Max is obvious enough. The Lion and then Ethiopian crashes tell us that much. But there’s not necessarily a bigger problem here, merely uncertainty about how big the problem might be. Or, even, whether there is a problem to be uncertain about.

That being, well, airlines which have bought the 737 Max can’t currently use them. Or at least in many places they cannot. This implies costs for said airlines – who is responsible for those costs? That depends on how the blame for the 737 Max problems is apportioned in the end of course. But I think we all know there’s a significant risk it’s going to be Boeing itself.

That’s not the end of it, though. If blame is assigned to Boeing, then sure, the compensation bill to the families of those who died will end up in Seattle, where it may or may not be insured, but probably is. But what about those losses of airlines which cannot fly the planes they’ve bought and still must pay for? And the costs of renting replacement planes to keep the schedules going?

It could end up being the much more expensive problem,

14 thoughts on “Boeing’s problem with the 737 Max”

  1. They could maybe scrap the 40 diversity councils they boast of on their corporate website. True, it might not save much money but it might focus minds on engineering rather than moral policing.

  2. ‘where it may or may not be insured, but probably is.’

    No, probably not. Big corps are self ‘insured.’ They have enough capital to cover themselves without paying money to a third party.

    Insurance business model:

    Premiums + return on assets = claims + admin + profit

    You don’t want to pay someone else’s admin and profit. If you are big, you don’t.

  3. It used to be dumbass software mistakes were Airbus’ signature. Now Boeing is trying their hands at it.

    The problems of porpoising/PIO have been known for decades. This is a monumental FU for Boeing.

  4. Bloke in North Dorset

    “No, probably not. Big corps are self ‘insured.’ They have enough capital to cover themselves without paying money to a third party.”

    Not forgetting that as a last resort our current crop of weak politicians will always bail them out.

  5. I’d be surprised if the FAA was not assigned some blame for effectively reneging on it’s regulatory duties and allowing Boeing to self certify the safety and suitability of large parts of the aircraft. Which greases the route for government money and bailout bingo.

  6. If Boeing sold planes without carefully worded warranty limtations, some lawyers will be in deep doo-doo.

    There has to be page after page of legalese limiting Boeing’s liability for “weird shit”.

    Doesn’t there?

  7. “Boeing to self certify the safety and suitability of large parts of the aircraft.”

    The problem isn’t mechanical, i.e. “large parts.”

    It is control software.

  8. Small nit – the compensation bill will go to Boeing’s head office in Chicago, not Seattle.

    They’d best start making some ‘donations’ to local ‘non-profits’ if any cases will be heard in Chicago. Get Jussie on board too.

  9. The real damage to Boeing will not be from the already serious technical bungle of making a key element of lateral stability have no redundancy (using a single AOA sensor!) but from the business motives alleged to have driven this:
    a) the allegation that the MAX8 was fundamentally a different aircraft, and that Boeing had attempted to conceal that, by increasing the authority of a stall warning system into a fly-by-wire system, without telling the pilots, to avoid the need for pilot type-coversion training
    b) Boeing had altered the override mechanism, again wuithout training opilots, from theprevious behaviour – the instictive pulling back on the controls – to a more complicated procedure involving disabling this obscure “stall warning system”. Unlikely to be achieved in a crisis before entering the high drag environment.

    These two claims, if proven, will show the rot is deep. And invite a very thorough investigation of what else has been done along the same lines.

    And I suspect the competition will also be hurriedly looking to clean their own slate too.

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