American aircraft manufacturing giant The Boeing Company has had unfavourable winds under its wings for some time now given the recent incidents of accidents involving its airplanes.
Since 2019, the company has made a loss of $32 billion and at present has a staggering $48 billion in debt, it may have to issue more debt this year to avoid falling into junk bond status.
According to business analysts, if any company other than Boeing suffered such losses, they would have gone bankrupt.
The company, along with its competitor Airbus, holds an exclusive position in the world market that has ensured its survival.
Insiders in the company said despite such high losses, Boeing could not deliver 5,600 commercial aircraft worth $529 billion.
Boeing reduced their output to ensure the quality of the aircraft they made.
“This situation cannot continue forever. Because they have little deviation. But that's why they don't want to get into trouble again,” US aerospace expert Ron Epstein said.
Wings heavy with debt
Boeing management says they are focusing more on safety and quality than profits given the recent instances of air accidents involving aircraft made by them.
Boeing's recently departed CEO Dave Calhoun said Boeing's finances are not as bad as they seem.
“It is important for us to understand how optimistic our employees and stakeholders are about Boeing's future. Rather, we also have incredibly strong selection across the portfolio. We also have world-class staff. We also have a lot of work ahead of us. But we are proud of our staff and we are very confident about the future,” he added.
Reputation precedes – far from favourably
Quality and safety issues have eroded the confidence of air travellers.
Additionally, Boeing’s orders were falling even before the Alaska Airlines incident.
Its European rival, Airbus, already has taken the lead in the market.
In 2018, 189 passengers were killed in the crash of Lion Air in Indonesia and 1 57 people lost their lives in the crash of Ethiopian Airlines in 2019. Both incidents involved Boeing-made aeroplanes.
The worst-selling Boeing 737 Max crash in the second quarter of 2019 came with a 20-month grounding of the fleet.
And Boeing's debt rose from $13 billion to $48 billion at the end of 2018 following the Max 737 crash.
Still flying thanks to air of advantage
Boeing has two advantages that other companies do not have.
Firstly, even if all of the company's customers decide to switch from Boeing to Airbus, the US-based company has orders for more than 8,000 commercial jets and is targeting to deliver about 800 planes this year.
If a new aircraft manufacturer wants to enter this business, it will take years and billions of dollars of investment to come up with a competitive business model.
Secondly, airline pilots are certified to fly only a specific model of aircraft. They cannot switch to a competing model aircraft at will.
Airlines also need to maintain a supply of spare parts to ensure the serviceability of their aircraft.
So once an airline chooses the 737 Max aircraft, it is very expensive to switch to a rival model.
US FAA opens probe into Boeing 787 inspections
The Federal Aviation Administration has opened an investigation into the Boeing 787 Dreamliner after the planemaker said some employees had committed "misconduct" by claiming some tests had been completed, Reuters reported on Monday.
The FAA said it is investigating whether Boeing completed the inspections to confirm adequate bonding and grounding where the wings join the fuselage on certain 787 Dreamliner airplanes "and whether company employees may have falsified aircraft records."
The agency said, "at the same time, Boeing is reinspecting all 787 airplanes still within the production system and must also create a plan to address the in-service fleet."
Boeing shares were down 1.5% at $177.03 late on Monday afternoon.
