The Boeing Co. 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 $57 billion.
VietJet Aviation JSC, which doubled its order to 200 of the aircraft priced at about $25 billion only last month, said it will decide on its future plans once the cause of the tragedy has been found, while Kenya Airways Plc is reviewing proposals to buy the Max and could switch to Airbus SE’s rival A320, and Russia’s Utair Aviation PJSC is seeking guarantees before taking delivery of the first of 30 planes with a $3.65 billion value before customary discounts.
That’s as Indonesia’s Lion Air firms up moves to drop a $22 billion order for the 737 in favour of the Airbus jet, according to a person with knowledge of the plan. Separately, a $5.9 billion Flyadeal order hangs in the balance.
Boeing, whose shares have lost 12 percent of their value this week, faces escalating financial risk after two disasters involving its newest narrow-body jet in the past five months. The stock was up less than 1 percent at $378.56 at 10:52 am in New York.
A Lion Air Max plane crashed on October 29, souring relations with Boeing after the manufacturer pointed to maintenance issues and human error as the underlying cause, even though the flights’s pilots had been battling a computerized system that took control following a sensor malfunction.
The 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.