"I'll be shocked if the Federal Aviation Administration (FAA) passes this turd." The internal emails among the Boeing employees were disclosed on January 7, which added to the suspicion that Boeing already knew that one of their airplane models was flawed before the disastrous accidents happened. Boeing 737 Max (B737Max) had two fatal crashes in 2018 and 2019, leading to the deaths of 346 people. Initially, Boeing tried to continue flying the airplanes. However, starting from March, they grounded B737Max because Congress had announced several documents which proved the aircraft’s safety problem. As a result, Boeing’s sales and orders for production declined, passing on the title of “world’s largest plane maker” to Airbus in 2019.

The first plane crash of B737Max happened in October, 2018: a Lion Air jet crashed into the Java Sea, killing 189 people. The second one occurred in March, 2019: an Ethiopian Airlines plane crashed into the city of Addis Ababa, resulting in the death of all 157 people on board. These two accidents resembled each other as they both fell just a few minutes after takeoff. Following the investigation, Boeing admitted that the safety system of B737Max was flawed and that their pilots were not adequately trained to fly the newly designed airplane.

By the time Boeing was under investigation by Congress, another crash had happened. On January 8, a Ukrainian plane crashed in Iran, killing all 176 people who were on board. As this airplane’s model was also B737Max, some doubted that this accident also happened due to technical flaws right away. However, this was not the case. As the tensions were high between the United States (U.S.) and Iran at that time, Iran mistakenly shot a missile at the Ukrainian plane, thinking it was a cruise missile sent by the U.S.

Boeing Lost Confidence

Although Boeing had been competing with its rival, Airbus, it was still able to maintain the title of “the largest plane manufacturing company” for the past eight years. However, Boeing finally gave way to Airbus in 2019. Boeing had more cancellations than new purchases, which reached a total of 87 canceled commercial plane orders in 2019. According to the Consumer News and Business Channel (CNBC), they only sold 380 commercial planes in total, which is the lowest since 2007. In contrast, Airbus had 768 new orders in 2019.

According to the Cable News Network (CNN), Boeing’s crisis cost 636 million U.S. dollars of net loss in 2019, and this was the first time to record an annual loss in 22 years. Boeing also had to compensate its customers with an additional 2.6 billion U.S. dollars. According to CNBC, on January 20, Boeing got at least 6 billion U.S. dollars in loans from banks, and they are planning to borrow more than 12 billion U.S. dollars to handle their crisis. In addition, after the FAA’s decision to halt further plane production until the middle of the year, on January 22, its shares dropped more than three percent.

Boeing lost the confidence of its customers. South Korean airlines originally planned to import 114 planes from Boeing, but most of the contracts have been canceled or delayed. Eastar Jet introduced two B737Max planes but grounded them, and their losses were increasing as the grounding prolonged. Korean Air suspended the import of 30 aircrafts until the safety problem gets resolved. Korean airlines are waiting for a policy announcement from the Ministry of Land, Infrastructure, and Transport (MOLIT) on how to deal with the contracts.

According to Professor Hurr Hee Young (Business School, Korea Aerospace University), “It is obvious that Airbus can enjoy the relative advantage due to B737Max’s crashes. However, Boeing has the potential to overcome the crisis.” Although Boeing has to endure the cost and time according to the accident, the company will not collapse. It is unlikely for Boeing to reclaim the title of “biggest plane-maker” in the short-term. However, Professor Hurr claims that Boeing could export planes again as the global plane market is affected by diplomatic matters.

Result of the Hasty Production

Experts speculate the excessive fuselage extension was the flaw in the aircraft. Professor Hurr explained how Boeing produced B737Max hastily in response to Airbus’s new model. Since the aircraft market is a duopoly of Boeing and Airbus, the rule of game theory applies, which means that both companies are incredibly aware of their rival, and their production influences each other. As Airbus successively manufactured the A300 series, Boeing started to upgrade its B737 model. As a result, B737Max was designed by impractically extending the fuselage to make more seats than their previous models. Professor Hurr then added, “If this is true, the FAA should also be responsible for the accident since they were in charge of examining the airworthiness - the air resistance of the plane.”

Another leading cause of the accident was the defective safety system and the overall work culture of the company. Pushing the employees to overwork without getting enough rest made more room for mistakes. Albio Sires, the congressman who investigated Dennis Muilenburg, read out an email sent in June, 2018, before the accident, to a general manager of the 737 program. As the leader of the program, the manager imposed two safety concerns: the exhaustion of the workforce due to their long working hours and schedule pressure, which induced the employees to circumvent specific processes. As a result, the safety mechanism called Maneuvering Characteristics Augmentation System (MCAS) was flawed. This software program is a safety program designed to adjust the angle of attack—how tilted the plane is.

Struggles to Escape from Crisis

Muilenburg resigned as a result of mishandling the two fatal crashes that happened because of the flawed safety mechanism. David Calhoun, former chairman of Boeing, became the new Chief Executive Officer (CEO) on January 13. The company said, “a change in leadership was necessary to restore confidence in the company moving forward as it works to repair relationships with regulators, consumers, and all other stakeholders.” Although they did not directly mention it, their remark implied that the resignation was related to the immature crisis management.

CEO Calhoun decided to resume production before the plane can be of service again. According to CNN, Calhoun did not mention the specific date, but he suggested it could be in two to three months regardless of the final approval from the FAA. He also claimed he would not layoff any workers though they temporarily halted the B737Max production. He said to his employees through email, "keep taking steps to maintain our supply chain and workforce expertise, so we're ready to restart production."

According to Professor Hurr, the prerequisite for flying airplanes is safety. Boeing’s deadly crashes informed the public how essential aviation safety is. Their ignorance about the flaw in the aircraft led 346 people to their deaths. Boeing’s sales are currently declining and they also lost in their competition with their rival, Airbus. As the company’s CEO has been newly appointed, Boeing should make systematic reforms in distributing duties. Boeing should be responsible not to repeat this mistake ever again.