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Boeing’s 737 Max Grounding Grinds On: CEO Daily

Boeing’s 737 Max Grounding Grinds On: CEO Daily

Good morning.

Katherine Dunn here, filling in from London for Alan, who is on vacation this week.

The saga of Boeing’s 737 Max continues, as the months-long grounding keeps rearing its head in the second-quarter results of airlines around the world.

This morning, low-cost Irish carrier Ryanair, famous for its cheap European deals, announced that profits in Q2 were down 21%, and while the drop was hardly due to the grounding alone—in particular, Brexit-stressed Britons now need to be tempted into vacations with ever-cheaper flights—the company’s CFO said it is still in talks with Boeing to determine how the plane maker will provide compensation. Earlier this month, Ryanair said that it will fly 5 million fewer passengers next year due to delayed deliveries of the 737 Max; it had ordered 135 in total.

That’s indicative of the effect of the grounding, which has hurt U.S.-based airlines—Southwest in particular—but has dealt an even harder blow to international firms. The pain has been particularly intense for low-cost carriers in Europe and Asia that have smaller fleets and face brutal competition; they are already struggling with rising costs, including for fuel.

Boeing has certainly felt the sting of its own crisis, but as analysts pointed out last week to Fortune, the plane maker does have one advantage: for new planes, carriers simply don’t have many other options (or really, just one option: Airbus).

That hasn’t stopped the bad news from coming. This weekend, the New York Times published an investigation into fumbles by the Federal Aviation Authority (FAA), whose cosy relationship with the company appears to have resulted in patchy regulatory work, delegating tests to in-house Boeing engineers, and FAA officials siding with Boeing over the protests of their own staff. The result was that after two crashes, which killed hundreds, the FAA was left in the dark about what exactly went wrong.

More news below.

Katherine Dunn


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