Boeing, whose shares have lost 12 per cent of their value this week, faces escalating financial risk after two disasters involving its newest narrow-body jet in the past five months.
Thursday 14, March 2019
Bloomberg) --The Boeing 737 MAX crash in Ethiopia looks increasingly likely to hit the planemaker’s order book as mounting safety concerns prompt airlines to reconsider purchases worth about $55 billion.
VietJet Aviation, which doubled its order to 200 of the aircraft priced at about $25 billion last month said that it will decide on its future plans once the cause of the tragedy has been found, while Kenya Airways is reviewing proposals to buy the MAX and could switch to Airbus’ rival A320.
Additionally, Indonesia’s Lion Air firms up moves to drop a $22 billion order for the 737 in favour of the Airbus jet, while a $5.9 billion Saudi-based Flyadeal order hangs in the balance.
A Lion Air MAX plane crashed on 29 October souring relations with Boeing after the manufacturer pointed to maintenance issues and human error as the underlying cause, even though the flights’ pilots had been battling a computerised system that took control following a sensor malfunction.
Sunday’s loss of an Ethiopian Airlines 737, in which 157 people died, bore similarities to the Asian tragedy, stoking concern that a feature meant to make the upgraded MAX safer than earlier planes has actually made it harder to fly.
The 737, which first entered service in the late 1960s, is the aviation industry’s best-selling model and Boeing’s top earner. The re-engined MAX version has racked up more than 5,000 orders worth in excess of $600 billion.
Boeing is in crisis as airlines around the world ground the plane, with regulators from Australia to Europe denying it access to their airspace. In a dramatic development, the European Aviation Safety Agency has split with the Federal Aviation Administration in banning the MAX, leaving the US regulator isolated in insisting that it’s still safe to fly.
In a statement, VietJet said that it is monitoring the situation and will reach a decision on whether to go ahead with its purchase following official conclusions.