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Regulators, airlines, passengers and even Boeing employees are virtually in a state of mutiny following a series of mid-flight disasters and a continuing decline in the company’s quality standards.
Investors are also not thrilled: Boeing (BA) shares fell 27%. since the beginning of the yearmaking it the second worst company in the S&P 500 index (just behind Tesla – down 35%).
Boeing’s problems
The latest problem for Boeing it was MondayWhen is it A 787 Dreamliner flying from Australia to New Zealand suddenly collapsed mid-flight, injuring several passengers. It’s unclear whether Boeing bears any responsibility in the case — the company said it was gathering information about what went wrong.
Passenger reports are not very favorable at a time when Boeing is already under federal investigation into door explosion on January 5 this year.
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Brian Jokat, a passenger on Monday’s flight, told CNN that he “woke up suddenly when the plane started to fall rapidly, so that people were thrown onto the ceiling of the cabin.”
Over the past six years, Boeing has been found responsible for two deadly crashes that killed 346 people, lost tens of billions of dollars, paid billions more in fines and settlements, and generated thousands of media headlines because of recurring quality control problems.
Boeing is not in good shape. Regulators too
According to CNN, there are only a handful of regulators that Boeing could face. The FAA is so underfunded that it has relied in part on… self-regulation by Boeing. The manufacturer was responsible for ensuring appropriate safety on its own.
And the agency said this week that Boeing failed half of an audit of its manufacturing facility.
Boeing said in a statement that Mrworks diligently to resolve issues identified by the FAA.
“Based on the FAA audit, our quality reviews and the recent expert report, we are continuing to make immediate changes and develop a comprehensive action plan to strengthen safety and quality and build the confidence of our customers and their passengers,” Boeing said in a statement. “We are focused on taking meaningful, proven action with transparency every step of the way.”
Too big to fail
Technically speaking, Boeing competes globally only with its European rival, Airbus. But this isn’t exactly real competition. Why? Boeing’s main customers are airlines, which cannot suddenly switch to Airbus if they are dissatisfied with Boeing. Pilots are certified in one brand or another, so it is difficult to find suitable personnel at short notice.
Given Boeing’s unique importance in the US aerospace industry, it is also a “too big to fail” company. Boeing is e.g. immune to most of the market forces, such as consumer choice, that other companies must contend with to stay in the game. The average customer often cannot simply switch to another plane, even if they really want to.
Moreover, Boeing already benefits from approximately 40 percent. their revenues from government contracts. As for the rest, most of the funds come to the company from aircraft orders that U.S. officials regularly sell abroad.
If Boeing had even more serious problems, it would quickly spread to other companies around the world. The problems, some experts say, may later be even close to those he caused financial crisis in 2008
