Global Grounding of Boeing 737 MAX And Its Economic Implications

Boeing is an established multi-national corporation specialised in the design and manufacturing of aircraft. It is among the “Fortune Global 500” corporations with US$93.3 billion sales in 2018. Recently, the company has hit the headlines with a slew of accidents, raising global public concerns about the safety of its best-selling Being 737 series. You may sign up for economics tuition with a good economics tutor to learn more about “Fortune Global 500” list.

The 737 series is Boeing’s best-selling commercial aircraft. Launched in the 1960s, Boeing had sold 10,000 units up to March 2018. The very first accident that involved a Boeing 737 aircraft took place in 1970, with no fatalities. Two years after in 1972, a Boeing 737 aircraft crashed while attempting to land. 45 were killed in the fatal accident, including 43 onboard and 2 on the ground. However, the accident involving the greatest number of fatalities was the 737 MAX 8 crash on 29 October 2018. A total of 189 passengers and crew members were killed. This was followed by another tragedy on 10 March 2019, also involving a Boeing 737 MAX 8 which crashed shortly after take-off, killing 157 people on board. With guidance from your economics tutor in economics tuition, discuss the various negative impacts of these accidents on Boeing.

Worldwide Grounding of 737 MAX Aircraft

The two fatal accidents involving Boeing 737 MAX within 5 months in October 2018 and March 2019 respectively triggered a worldwide grounding of the aircraft. China was among the first to ground the aircraft counting a fleet of 97, the largest of the world. Other countries followed suit, including the US and Canada. Singapore adopted a more drastic measure with a total ban of Boeing 737 MAX aircraft in and out of Singapore. In consultation with your economics tutor in your economics tuition class, compare the impact of a temporary grounding and ban of the aircraft. You may visit Economics Cafe Learning Centre, the best economics tuition centre’s website for such case studies. The website also carries articles by its principal economics tutor Mr Edmund Quek and other commentators.

Investigations into both accidents pinpoint to the newly introduced Maneuvering Characteristics Augmentation System (MCAS), also known as anti-stall system. It causes the airplane’s nose to go down under certain circumstances, when activated. It is suspected that the MCAS system was unintendedly activated in both accidents and caused the airplanes to crash at a steep nose-down angle. Among the wide range of occupations, pilot is a highly paid but dangerous job. You may opt to become an economics tutor for the safe working environment. The best economics tuition centre and the best economics tutor can be found in Bishan.

Economic Implications

The global grounding, expected to extend through August 2019 has resulted in flight cancellations by airlines around the world. Some of them have demanded compensation from Boeing while others have cancelled their orders for the 737 MAX aircraft. Based on Boeing’s estimation, its loss from the global grounding for the first quarter itself could be as much as US$1 billion. Apart from this, Boeing announced that it received only 32 new orders in the first quarter of 2019, about one fourth of 122 new orders received in the same period last year. Boeing reported a Q1 2019 revenue of US$22.92 billion with earnings of US$2.15 billion, meeting analysts’ expectations. The impact of order cancellations has yet to be felt. Discuss with your economics tutor in one of the economics tuition classes its likely financial implications on Boeing’s report card for the next quarter.

As the company struggles to emerge unscathed from its recent setbacks, another Boeing 737 airplane slid off into a shallow river in Florida on 3 May 2019. There were 143 people onboard. Fortunately, the latest accident resulted in no fatalities.

Linda Geng

Click to Read Next Post

economics tuition, back to homepage

Economics Tuition Singapore @ Economics Cafe
Principal Economics Tutor: Mr. Edmund Quek