[Business & Issues] Boeing, the Icon of 'Breakdown'... The Humiliation of Zero Aircraft Orders

737 Max Orders Zero for Two Consecutive Months
Safety Trust Plummets... Stock Price Also Drops Sharply
Spaceship Safety Reliability Also a Hindrance

[Image source=Reuters Yonhap News]

Boeing, the world's largest aircraft manufacturer, is facing a crisis as its credibility and stock price plummet due to a series of safety incidents. With ongoing aircraft and spacecraft defects, the company's credit rating has fallen to a risky level. In particular, the latest flagship model, the 737 Max, which has frequent accidents, recorded zero orders for two consecutive months, causing its sales performance to lag significantly behind its competitor, Airbus.

The reason Boeing is in this crisis is attributed to a long-standing safety negligence that was ignored within the company. As whistleblowing on safety issues emerged mainly from former employees, Boeing's image has further deteriorated, and a full-scale investigation has begun in the U.S. Congress. Attention is focused on whether Boeing, facing its worst crisis since its founding, can overcome this and survive.

Aircraft Deliveries Halved... Humiliation of Zero Orders for 737 Max

The Boeing brand product featuring the slogan "If it is not Boeing I'm not going." [Image source=Boeing Store]

Last month, Boeing delivered 24 aircraft, shrinking by 50% compared to the same month last year. The 45% decrease in 737 Max deliveries had a significant impact. The 737 Max is Boeing's latest flagship model, but recent order cancellations have resulted in zero new orders for two consecutive months. All four new orders Boeing received last month were for the 787 Dreamliner model, down from seven in April.

Since the January incident where a 737 Max aircraft operated by Alaska Airlines lost a fuselage door shortly after takeoff and made an emergency landing, the trust in this model has hit rock bottom. The 737 Max is still under investigation by the U.S. Federal Aviation Administration (FAA) for safety issues and remains grounded more than five months after the accident. As a result, after American Airlines placed an order for 85 units in March, all airlines have been avoiding orders for the 737 Max model.

With orders for the flagship model plunging to zero, Boeing's credit rating is also at risk of further downgrade. According to Bloomberg, in April, credit rating agency Moody's downgraded Boeing's credit rating to 'Baa3' and revised the outlook to 'negative.' Although the credit rating is still investment grade, continued poor performance raises the risk of falling to junk bond status. Some even express concerns about potential difficulties in financing aircraft production.

Continuous Safety Incidents Since January Door Accident... Stock Price Plummets

Following the January accident, ongoing safety incidents have caused Boeing's stock price to plunge. Boeing's stock, which was $251.76 per share at the beginning of the year, dropped more than 27.4% to $182.67 on the 12th of this month. In March, a Boeing 737-800 operated by United Airlines (UA) experienced an incident where an external panel detached during flight. In May, a Boeing 767 cargo plane operated by FedEx made an emergency landing on its fuselage after the landing gear malfunctioned while landing at Istanbul International Airport in T?rkiye.

The sudden death of a whistleblower who exposed internal safety issues at Boeing further heightened investor anxiety. In March, John Barnett, a former Boeing employee who had been engaged in legal battles with Boeing following his whistleblowing on safety issues, was found dead from a gunshot wound in South Carolina. Local police concluded it was a suicide, but suspicions of foul play spread, further damaging Boeing's image.

Earlier, Barnett had started exposing Boeing in 2019 for using non-standard parts in aircraft manufacturing and ignoring standards. He claimed he reported these issues to management while employed but was ignored. He also pointed out that due to tight schedules for new aircraft production, assembly was rushed, leading to the omission of parts material tracking procedures, the use of defective parts, and even the reinstallation of defective parts retrieved from trash bins.

Following the series of accidents and whistleblowing on poor safety management, the U.S. Congress has launched an investigation into Boeing. On the 18th, David Calhoun, Boeing's CEO, is scheduled to appear before the Senate Permanent Subcommittee on Investigations to explain safety issues including aircraft defects and the sudden death of the whistleblower.

Although the Manned Spacecraft Launched... Safety Trust Falls Behind SpaceX

The Boeing manned spacecraft, Starliner, launched on the 5th (local time) from the U.S. Space Force base at Cape Canaveral, Florida. [Image source=AFP·Yonhap News]

Following issues with Boeing's aircraft, defects in its spacecraft have also occurred repeatedly, significantly damaging trust. According to the U.S. IT media Gizmodo, on the 12th, the Starliner manned spacecraft produced by Boeing experienced helium gas leaks more than five times. The spacecraft had arrived at the International Space Station (ISS) on the 6th, but helium gas continued leaking from the spacecraft stationed outside the ISS. NASA stated that fortunately, the leak amount is still low enough to allow a safe return flight to Earth.

However, the Starliner spacecraft, which has faced numerous defects from launch to ISS docking since the 6th, is subject to a comprehensive investigation. The Starliner had its launch postponed three times due to jet thruster malfunctions, and during ISS docking, one of the five jet thrusters malfunctioned and was turned off, causing the docking to be delayed by about an hour.

Although the manned spacecraft barely succeeded in docking with the ISS, ongoing defects suggest a widening gap with SpaceX, which successfully launched a manned spacecraft four years ago in 2020. Both companies were selected as developers in NASA's Commercial Crew Program in 2014 and received funding: Boeing received $4.2 billion (about 5.785 trillion KRW), and SpaceX received $2.6 billion (about 3.58 trillion KRW).

However, despite receiving more funding, Boeing's manned spacecraft launch was much later, and overall, Boeing has shown weaker competitiveness than SpaceX. As a result, SpaceX is expected to dominate the commercial spacecraft operation sector in the future.