Why Boeing Will Survive the Crash
“Flight JT 610 was headed for the western city of Pangkal Pinang. Rescuers have recovered some bodies and personal items, including baby shoes. There is no sign of survivors. The cause of the crash, which involved a plane that had been in operation since August, remains unclear. The incident is reported to be the first major accident involving a Boeing 737 Max, an updated version of the 737.” -BBC World News
October 29th, 2018: reports such as this one erupted throughout international media. Lion Air Flight 610 had crashed into the Java Sea thirteen minutes after departing from Soekarno–Hatta International Airport in Jakarta, Indonesia. All 189 passengers and crew members were killed. The following spring, another deadly crash occurred involving a Boeing 737 MAX.
March 10th, 2019: Ethiopian Airlines Flight 302 plummeted out of the sky a mere six minutes into the flight. There were no survivors. In both incidences, tragedy was attributed to pilot error and the inexperience of foreign aviators. However, in the public eye, Boeing was still to blame. Universal anger, fear, and grief compelled airlines around the world to ground the Boeing 737 MAX passenger airliner. The groundings would become the longest of any U.S. airliner ever. The troubling event caused Boeing stock to drop from a high of $446.01 on March 1st, 2019 to $391.54 by April 1st of the same year. The company was then further devastated by the coronavirus pandemic and heavy restrictions on travel. By mid-March of this year, Boeing stock price had plummeted to just below $100. It has since rebounded and is currently trading around $180. Despite the slight upsurge, Boeing stock continues to remain extremely undervalued. Boeing is the second-largest airline manufacturer in the entire world, as well as the second-largest defense company. The Boeing Company continues to produce arguably the best commercial planes money can buy, such as the 787 and the up and coming 777X. As social distancing restrictions ease, people will inevitably return to airports by the masses, and tourism will once again become the booming industry we all know it to be.
Upon investigation of both 737 MAX crashes, it was revealed that, if engaged while malfunctioning, the Maneuvering Characteristics Augmentation System (MCAS) could potentially cause the plane to go into a nosedive. The MCAS is a new type of automatic adjustment for trim, something pilots use to reduce flight control speeds and force feedback. It is most commonly used during dynamic flight regimes like climbing and descending, in which the plane is rapidly accelerating or decelerating. Historically, most trim systems were manual, meaning that once pilots sensed excessive force, they could simply push a button to lessen the force. However, newer systems are electronic and automatic. The MCAS is one such system.
Many MCAS systems were installed on older 737 commercial airliners, which still employed manual systems. These manual systems allowed pilots to override the automatic system when things went wrong. When the pilots involved in the two Boeing accidents noticed too much trim while operating with MCAS, the nose of the plane was dangerously trending up or down. In these situations, the procedure is to disengage the MCAS with a one-button push and operate manually. Instead, these pilots, inexperienced with the new system, recognized the trim problem, they attempted to adjust by reengaging the MCAS. This is ultimately what caused both devastating crashes.
Across the U.S., 737 pilot groups had acknowledged that this was an awkward add on the system and emphasized in training that a pilot should immediately disengage the MCAS upon malfunctioning. However, this vital training was often neglected in foreign nations with inadequate flight schools, specifically in underdeveloped countries that do not have high tech simulators. In effect, the crashes were the cause of a system malfunction due to pilot error. This fact was woefully ignored in the media across the world and Boeing was under extreme scrutiny in the following months.
The crisis Boeing is currently facing can be compared to that of Chipotle and the E. coli outbreaks at their restaurants. Chipotle is a household name across the United States and is arguably the largest and most recognizable Mexican style food chain. In the fall of 2015, the first accusations arose of people becoming sick after eating at Chipotle. E. coli was found to be the source of illness at locations all across the United States. Their stock price fell from just over $720 to $300 in the winter off 2017-2018. After this fiasco, Chipotle quickly put in place stricter safety procedures and training for their staff to prevent any further outbreaks. As things settled, people returned and continued to buy their food. Enough time had passed that the majority of people either forgot or were no longer concerned with the possible risks of contracting E. coli. Their stock price is now hovering around the highest it has ever been, even with the COVID-19 pandemic wreaking havoc in the market. As the 737 MCAS issue fades from the limelight and the travel industry rebounds from the pandemic, so will Boeing along with it. Whether in a year or two or even five, The Boeing Company will recover financially and will readopt its original upward trend.
Sources:
https://www.bbc.com/news/world-asia-46014463
https://www.bbc.com/news/world-africa-47513508
https://finance.yahoo.com/quote/CMG?p=CMG&.tsrc=fin-srch