So What Is Boeing's Game Plan For 2020
2019 will go down as one of the worst years for Boeing. From high-profile aircraft crashes to mechanical failures and unmet production targets, it was a year that will forever change Boeing.
The crashes and aircraft failures seriously hurt the perception of the company’s dependability, integrity, and financial stability. Trouble first started towards the end of 2018. On October 29, 2018, the Lion Air Flight 610, a Boeing 737 Max flying from Jakarta to Pangkal Pinang (both in Indonesia), crashed 12 minutes after takeoff, killing all 189 passengers and crew.
Five months later, on March 10, 2019, another major accident occurred. The Ethiopian Airlines Flight 302 from Addis Ababa headed for the Jomo Kenyatta Airport in Nairobi crashed, just six minutes after takeoff. All 157 passengers on board as well as flight crew died. Both accidents involving the 737-Max.
More Crashes, Financial Losses, and Eroded Trust
The Ethiopian and Indonesian crashes, however, were just the beginning of a series of problems for Boeing.
Less than two months after the Ethiopian Airlines crash, the Miami Air Flight 293, a Boeing 737-800, skid off the runway into the St. Johns River. There were no casualties, but 21 people suffered various degrees of injuries.
These crashes took a major toll on Boeing’s branding and finances. In mid-2019, the 737 Max was grounded
, costing Boeing in excess of $8 billion according to the Bank of America. That’s before Boeing likely pays out another $5 billion in compensation to victims of the crashes.
As the challenges continued to mount, Boeing was forced to slash production of the 737 Max by 20% to 42 per month. By July 2019, the company was even mulling suspending the 737 Max altogether.
These continual issues led to a significant reduction in profits. Although Boeing still made a profit in 2019, financial statements show that year-over-year profits fell by 95%.
In the end, however, the biggest cost was the damage to Boeing’s image. With more than 340 passengers losing their lives, widespread backlash, and the company coming under investigation by the FAA and even having to testify in Senate hearings, everyone from individual travelers to Boeing’s business partners troubled about an ongoing dependency on Boeing.
At one point, Senator Tester of Montana was quoted saying “I would rather walk before getting on a 737 Max.” There are likely many other people who feel the same way even today.
Making Things Right; What Boeing Plans to Change in 2020
Boeing appears prepared to do everything it takes to make things right, starting 2020.
First off, as announced in December, the company has separated from former CEO Dennis Muilenburg, under whom the recent crashes and incidents happened. Muilenburg will be replaced by David Calhoun, the company’s board chairman. Calhoun will officially assume office on January 3, 2020. Lawrence Kellner, a board member since 2011, becomes the new non-executive chairman.
Additional personnel changes continued in October with Boeing replacing its head of commercial airplane units, Kevin G. McAllister
, with long-term employee Stan Deal. Additionally, the company has committed to adding a safety committee to its board as well as streamlining oversight.
When it comes to the aircraft, Boeing has fixed the MCAS software issues that were blamed for both the Indonesian and Ethiopian crashes. But, Boeing is not stopping there. The company is also set to reexamine its flight deck designs and may consider a few feature changes to the 737 Max to restore public trust.
2020 will a huge year for Boeing as it will likely define how quickly they will recover from the devastating year of 2019. At the very least, experts predict the long-awaited return of the 737 Max and a reasonable uptick in profits and revenues.