Local airlines reconsider Boeing 737 MAX orders

March 25, 2019 | 08:00
Vietnamese airlines may have to give up their intentions of purchasing hundreds of Boeing-made aircraft due to the controversy surrounding two recent crashes which killed hundreds of people.
local airlines reconsider boeing 737 max orders
January’s Ethiopian Airlines crash, which killed 157, was the second Boeing 737 MAX to crash in just a few months, Photo: Le Toan

Viejet’s consideration on whether to retain the $20-billion order for Boeing 737 MAX aircraft has aggravated the crisis of the US-based aircraft maker.

Last week a representative of Vietjet told VIR, “We are following the Boeing 737 MAX case and will decide whether we will put the aircraft into commercial operation after receiving the official conclusion, and guidance from the global aviation authorities as well as the Civil Aviation Authority of Vietnam.”

Also discussing the issue with VIR, a representative of Bamboo Airways, which ordered 30 Boeing 787-9 aircrafts, revealed no intentions to continue with the purchase of the 737 MAX. “Currently, Boeing 737 MAX has been banned across the world. Even Boeing has also temporarily halted manufacture of this type of aircraft.”

The two crashed Boeing 737 MAX airplanes as well as the global ban may lead to the company losing $600-billion worth of orders for more than 5,000 planes across the world. 157 people died in February’s Ethiopian Airlines crash, shedding further doubt on the safety of Boeing 737 MAX aircraft just a few months after 189 died in an Indonesian Lion Air crash last October.

While Vietjet is still considering the Boeing order, numerous airlines across the world have shown intentions to cancel orders completely.

US-based Bloomberg newswire stated that Kenya Airways is considering buying Airbus A320 airplanes instead of the 737 MAX. Russian airline Utair Aviation also asked for assurances from Boeing before receiving the first batch of goods, including 30 Boeing 737 MAX.

Meanwhile Lion Air is examining its options in cancelling a $22 billion standing order for the Boeing product. Saudi Arabian Airlines’ $6 billion order is also teetering on the edge due to the controversy.

Along with the US government’s investigation, the global ban has raised concerns on the negative impact to airline business in the case of not being able to put Boeing 737 MAX airplanes into commercial operation.

To maintain business, airlines including Vietjet may be forced to cancel the Boeing orders if the global ban is maintained.

The Ethiopian Airline crash has pushed Boeing into its biggest ever crisis. The company’s market valuation lost $27 billion and its stock price has seen a drop of 12 per cent since March 10.

Even worse, Boeing currently faces the risk of losing $600-billion in orders, as well as potentially having to spend huge amounts in compensation for airlines containing 737 MAX aircraft due to the global ban.

On March 13, Norwegian Air publicly requested compensation for its grounded fleet of Boeing 737 MAX. According to Norwegian Air CEO Bjørn Kjos the airline lost 1 per cent of its seat capacity due to the grounding, and so wishes Boeing would compensate the airline for the damage.

Surrounded by huge risks, Boeing is currently keeping silent on the case. It recently released an announcement to upgrade the airplane’s software related to the Manoeuvring Characteristics Augmentation System (MCAS). However, the upgrade will not smooth the concerns on Boeing 737 MAX aircraft or be a factor in the official result of the investigation.

Despite the cause of the tragic crashes still being under investigation, opinion is divided on whether the faulty automatic pilot could be the culprit. According to data published by Aviation Safety Reporting System under NASA (tên đầy đủ), at least two US pilots reported that their aircraft nosedived and lost altitude when using autopilot mode on the B737 Max 8 in the last few months.

In case of the fault of the two crashes falls into the airplane’s design, Boeing may spend at least $500 million to revise the error, and the fixing time may fluctuate between three and six months, according to analysis expert Ronald Epstein from Bank of America. Thus, revising the error could lead to Boeing losing a year of sizable profit on the aircraft.

One firm’s nightmare is another firm’s opportunity, and the time ahead is seen as just that for its competitors, specifically Airbus, with airlines across the world potentially seeking out Airbus airplanes as an alternative solution to the Boeing 737 MAX.

In fact, both Vietjet and Bamboo Airways told VIR that they have put Airbus 320 and Airbus 321 Neo aircrafts into operation. In addition, the Bamboo Airways representative said the airline will buy further Airbus 321 Neo jets, as well as negotiate with Airbus to buy more of the aircraft maker’s products.

By Van Anh

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