TheEconomistAugust 24th 2019 491B
oeing haslong been a central cog of
America’s industrial machine. Each
year it sells $100bn-worth of aerospace
equipment and services around the world
and pays $45bn to other American firms. It
is the world’s largest aircraft-maker and
America’s largest manufacturing exporter.
Its commercial jets, which account for 60%
of revenues, ferry millions of passengers.
One in 100 American workers toils either
directly for Boeing, whose workforce num-
bers 137,000 in its home country, or one of
its 13,600 domestic suppliers, which em-
ploy a further 1.3m people in mostly well-
paid jobs. In short, what is good for Boeing
is good for corporate America.
The flipside is also true, as has become
obvious in the wake of two crashes of Boe-
ing’s 737 max aircraft, in October and
March, which have been linked to a mal-
functioning flight-software system, and
which killed 346 people. The human cost is
immeasurable. The financial blow to Boe-
ing itself, its suppliers and its airline cus-
tomers is more tangible—and mounting.
The company has continued to churn
out the troubled aircraft since its ground-ing by regulators in March. But it has not
been able to deliver them to customers. As
a result Boeing’s inventories have grown by
$6bn so far this year. The flightless planes
fill all free space at its facilities, including
car parks. Add the knock-on cost for air-
lines and for the supply chain and a rough
estimate is that every quarter that the best-
selling airliner remains on the ground
costs $4bn. As the bill spirals an entire in-
dustry is now willing the plane to be back
in the air by the end of the year.Start with the airlines. Pressure on car-
riers to cut costs made the fuel-efficient
max Boeing’s fastest-selling model ever.
Around 5,000 have been ordered since its
launch in 2011 and nearly 390 delivered.
Southwest, an American carrier with 34
such planes, has cancelled thousands of
flights. In July it revealed a $175m hit to pre-
tax profits in the second quarter. American
Airlines, which has scrapped 115 or so
flights a day, reckons that full-year profits
will be $350m lower as a result. oag, an air-
line-data firm, estimates that, globally, the
grounding will cost airlines $4bn in sales
by November. Many airline bosses would
agree with Michael O’Leary, chief executive
of Ryanair, Europe’s second-biggest carrier
with 135 maxes on order, who has told Boe-
ing to “get their shit together”.
Some airlines have put the plane back in
their schedules for November, on the as-
sumption that once Boeing submits fixes
to the faulty software in September, Ameri-
ca’s Federal Aviation Administration (faa)
and its counterparts in other countries will
allow a return to service before the end of
the year. This looks optimistic. Even if reg-
ulators approved the new software, it
would take six to eight weeks to get planes
out of storage and in the air. And as Jose
Caiado of Credit Suisse, a bank, points out,
it is unclear if pilots require retraining in
flight simulators, adding more delays.
Southwest, which aims to get the maxin
the air by January, seems to admit as much.
In the meantime, airlines are plugging
gaps with other planes. Southwest is retir-The aerospace industryTick tock
As newly built 737s pile up in factories and car parks, the aerospace industry
waits for Boeing’s bestselling plane to return to the skies. Fingers crossedBusiness
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