Boeing: The Story Behind the Company's Financial Trouble
A timeline of how the 737 crashes impacted Boeing in more ways than one.
Boeing. Authorities say a Lion Air passenger plane carrying 189 people has crashed into the sea. Breaking news-- an Ethiopian Airlines flight has crashed shortly after takeoff from Addis Ababa, killing all 157 passengers and crew thought to be on board. The world's largest aircraft manufacturer rocked the airline industry and instilled fear in players all over the world after two fatal crashes in five months. Up until these accidents, the 737 Max was the fastest-selling airplane in Boeing history. From the time it was announced in 2011, Boeing secured more than 4,700 orders for the plane from more than 100 customers. The Max fleet flew the skies for over two years before being grounded worldwide in March 2019. We're going to be issuing an emergency order of prohibition to ground all flights of the 737 Max 8 and the 737 Max 9. Now, Boeing is facing escalating bills, numerous legal threats, and a crisis of public confidence. Boeing operates four divisions-- Boeing Commercial Airplanes, Boeing Defense, Space, and Security, Boeing Global Services, and Boeing Capital Corporation. About 60% of Boeing's sales come from its commercial plane segment. So it's no surprise that the 737 crashes are hurting Boeing's bottom line. In Q2, Boeing suffered its biggest quarterly loss in the company's history. Boeing also saw a big dip in revenue in Q2 compared to last year, but classified $5 billion of that as a one-time charge related to compensating airlines affected by the worldwide grounding. Separately, Boeing has set aside over $100 million for victims' families and communities impacted. In another sign of financial trouble, Boeing delivered 104 fewer airplanes to customers in Q2. That leads to another major concern for the company-- competition. Airbus is Boeing's biggest rival. In Q2, Airbus managed to deliver more commercial planes than Boeing for the first time in eight years. So what happens to Boeing's finances from here? Boeing paints a relatively rosy picture. It says a partnership with Embraer, the world's third-largest producer of aircrafts, will help it battle Airbus. It points out that the world will need over 44,000 new planes, worth $6.8 trillion, between 2019 and 2038. And it expects to continue its reign as the world's top plane producer. But much depends on how quickly the 737 Max returns to the sky. The longer those planes sit on the ground, the more they cost Boeing. Even when the FAA clears the plane to fly again, there's no guarantee passengers will want to be aboard. Aviation experts say passengers are now afraid to fly on Boeing's 737 Max jets. 53% of American adults who were polled said they wouldn't want to get on one of these planes even when regulators say that it's safe. CEO Dennis Muilenburg says this is a defining moment for Boeing, and it truly is.