Boeing 737 Max Crash How badly it is going to affect Boeing

The world was in a shock when it heard about a Boeing 737 Max had crashed in Ethiopia, and this crash killed 157 people. After this crash, some strong steps had taken by many countries, but the question arises, how much this will hit badly to Boeing. In this blog, we will see how economical it will affect Boeing.

 
Boeing 737 Max is a relatively new plane introduced in August 2011, and it performed its first flight in January 2016. It is a fourth generation aircraft which cost from $99.7 million to $134.9 million for a unit. They consider this plane a modern plane.


It is not the first time that a plane has crashed and people died if but it is rare that an aircraft manufacturing company is to be directly blamed for the accident. Here, Boeing is in the fault because of the same model Boeing 737 Max 8 has crashed twice in five months killing all approx. Three hundred forty-six people on board and the pattern was similar in both planes as both crashed within 15 minutes of take-off.

After the whole crash world was started criticizing the plane and the company so let’s see how it will affect the Boeing.

1. Countries grounding planes- 

                                                        The biggest problem which Boeing is facing is that after this many countries ground 737 Max. Till now 29 countries had grounded the plane, which comprise Argentina, Australia, Austria, Belgium, Brazil, Cayman Islands, China, Ethiopia, EASA member states, France, Germany, Iceland, India, Indonesia, Ireland, Italy, Malaysia, Mexico, Mongolia, Morocco, Netherlands, Norway, Oman, Poland, Singapore, South Africa, South Korea, Turkey and the UK are the countries.

The problem is not stopping here many countries have also banned this plane in their airspace this is an enormous problem for Boeing as this will reduce demand for their aircraft.

Because of ground many pre-booked flights have to get cancelled or has to use another place, this will create pressure on the airline, and if this problem is not solved or the ban is not lifted quickly, then this will affect the future orders for the Boeing.

In New Delhi they have cancelled from this morning, only 14 flights and the airline have to pay the refund.

2. Future orders can get cancelled-

                                                  As we see above how an airline and passengers have to suffer in this situation and due to all this-this will affect the other place by the airlines for this plane.

The biggest market for Boeing is China and China was one of the first countries to ground the planes. Boeing has estimated that China will need 7,690 commercial jets in upcoming years. According to Boeing 180 planes had ordered by a dozen of Chinese airlines and 76 out of them had delivered.

Boeing has received approx. Four thousand seven hundred orders for 737 Max and 80% of it are a backlog.

If this situation continues, then Boeing can face problems as many airlines can cancel their orders.

Let’s understand it numerically how big this loss can become.

Earlier Boeing has 4,700 orders imagine if 10% of it gets cancelled, which are 470 plans and cost of one plane is $134.9 million, then the total loss will be $63.403 Billion, which is an enormous amount and it is just for 10% of the current order.

3. The share price of  Boeing-

                                                   The Boeing share price had shown a drop in share price after the crash of 10Th March 2019.

-          www.Google.com

As we can see in the above diagram, the price of the share has dropped, it is rising after the incident, but you can see the drop.

4. Goodwill of Boeing-

                                                      Goodwill is an image of the organization in the world, and every MNC’s tried to establish and raise their goodwill in the market. Moore the goodwill more company gets profit, and more these companies get new business.

                                                                                                    

As you can see in an above diagram, the goodwill of the Boeing is raised, and this is a good thing for any company, but after the incident, it is a very much likely that Boeing will lose some of its goodwill.



Goodwill is not only raising by the business reviews and opinions of people also affects the goodwill in this Boeing will get hurt because of the problem is being lifted by international media this topic was breaking news for many news channels for hours,
 there is a hashtag on twitter #737max which spread the news and this news creating the bad image regarding the plane and company in the minds of many people.

5.   Invest in identifying and solving the problem-

                                                                                The very next problem arises after a crash is to identify and solve the problem in Boeing 737 Max and will take a considerable amount of money and Boeing has to do the research on the plane and identify the problem and solve the problem as soon as possible. Already Boeing was said to have invested about $3 to $4 Billion (might be higher) in developing of this plane and additional money, which will be required to identify and solve the problem, after doing that also it is no guaranty that this plane will get the same response as early. So Boeing is when it has to invest, but the return is uncertain.  

Many countries will strictly examine before adding this plane onto their fleet.

Conclusion-

                       Boeing is one of the leading companies in the aeroplane making industry, and its 737 series is in use from 1967.  It was a shock when two planes of the same model crashed; these crashes will going to affect Boeing economically. Boeing has to work harder if they want to get their market share back.


I feel sad for the people and their family who have suffered in this crash, and that’s why I support the grounding of Boeing 737 Max.