Boeing's Fatal Mistake

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On Sunday, sudden tragedy struck the families and friends of the 157 people killed as a result of the horrifying Boeing 737 MAX 8 crash just southeast of Addis Ababa, Ethiopia. Among the victims of the crash were passengers hailing from countries all over the world, including China, America, and Canada, making this tragic event a key world focus.

Almost immediately, the cause of the crash was suspected to be a system malfunction with the plane, which would make it the second 737 MAX 8, a model which Boeing had newly released, to crash within the past five months. The first one, Lion Air flight 610, crashed right into the Java sea, off the east coast of Indonesia. Overwhelming evidence connects the two tragedies in a similar fashion; besides the same plane model, both planes have reportedly crashed just minutes after takeoff, which is speculated to be connected with the new feature that the 737 MAX 8 offers: an automated system designed to prevent stalls, meaning that this feature likely forced the plane into a constant downward incline, despite the pilot’s efforts.  

With investigations going on and no official statements being made public yet, it has not been confirmed that the blame is with Boeing, although many have already made their own verdicts, and Boeing’s apparent recall of the sold 737 MAX 8s imply that the blame is likely on Boeing’s own hands. Many countries that receive high volumes of daily air travel, such as Australia, China, Ethiopia, and South Korea, have taken action and have banned the model until a conclusion is made, and this list of countries is only growing longer everyday. On the other hand, airlines that already have existing models of the 737 MAX 8, such as American Airlines, have experienced troubles calming customers down, and a sharp decline in sales in the international airline industry seems to be evident due to generalized fear.

On Monday, Boeing stock shares tumbled down 11% within hours of opening, which is astronomical for the aircraft manufacturing megacorporation that it is, wiping more than $16 billion of Boeing’s face value. However, as with most megacorporations, Boeing quickly recovered the majority of price within hours of the initial shock on Monday, and impulsive investors were able to snag the well esteemed stock at a largely discounted price. Boeing has consistently shown to live up to its name as one of the Dow’s most prominent stocks, and has had the highest return among the 30 stocks in the past decade. The possible blood on the company’s hands poses some questions to investor confidence, as well as short term spending and the success or failure of future Boeing models, as the 737 is the most iconic staple of Boeing, commonly called the “backbone” of Boeing’s cash generation. For now, one can only wait for the final verdict from investigations to arise, which could either save Boeing’s image or trigger another landslide similar to the one traders saw on Monday.