Number Theory: Can Boeing prevent its worst ever stall?

Although the Covid-19 pandemic brought the aviation sector to a standstill, Boeing had been already struggling to maintain the confidence of share markets

US aviation giant Boeing is going through a challenging time. After a series of security related issues on Boeing aircraft, the company witnessed a large fall in its stock price and its CEO Dave Calhoun said he would step down by the end of the year. What exactly is the nature of problems facing Boeing? How bad is it relative to previous crises? Here are four charts which answer this question.

A Boeing 737 MAX 8 aircraft. (Reuters)

Can Boeing prevent its worst ever stall?

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  Boeing is bleeding money…

  Boeing has not been profitable for five years in a row now. The predicament which Boeing has been facing is strongly linked to an aircraft which was supposed to be a game-changer for the company (737 Max) , as was noted by an editorial in the Financial Times on March 22. “Five years after twin Boeing 737 Max 8 plane crashes killed 346 people, and two months after a door panel on another (737) model blew out mid-flight, the company’s woes seem to be deepening”, the editorial said.
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  …And its woes are mainly the result of one particular aircraft

  The crashes referred to in the FT editorial were Lion Air Flight 610 on October 29, 2018 and Ethiopian Airlines Flight 302 on March 10, 2019. These flights crashed minutes after taking off from Jakarta, Indonesia and Addis Ababa, Ethiopia respectively and involved Boeing 737 Max aircraft (the aircraft took its first flight only in 2016). When launched, the 737 Max was supposed to be a game changer for Boeing offering more fuel efficiency and seating capacity than the previous models. According to Boeing’s own forecast, single-aisle aircraft such as the 737 Max and its rival Airbus’ A320neo, will account for 75% of all new aircraft deliveries in the next 20 years. However, things have gone South very quickly and the aircraft now has the second highest fatal crash rate – it is defined as fatal passenger events per million flights – among passenger aircraft. The aircraft ranked above the 737 Max is the Concorde which has been discontinued.
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  737 Max problems have seen Boeing lose a lot of market to its European rival Airbus

  Put together, Boeing and Airbus account for 99% of the large commercial aircraft market. In the recent past, Boeing has ceded a lot of ground to its trans-Atlantic competitor. Data on aircraft orders and deliveries for the two companies shows this clearly. Airbus has been ahead of its American rival in both new orders as well as deliveries of aircraft during most years in the last two decades. Data shows that the gap between the two has been growing in terms of new orders. Airbus’ lead over Boeing in terms of the number of aircraft orders it has received adjusted for cancellation have gone up nearly 127% since 2019, compared to the sum of orders received by both the companies between 2009 and 2018.
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  And markets have been rooting for Airbus over Boeing

  Although the Covid-19 pandemic brought the aviation sector to a standstill, Boeing had been already struggling to maintain the confidence of share markets before, in the wake of the twin crashes involving 737 Max. The pandemic only made the fall of its stock steeper. However, it is the post-pandemic period which has proved to be the worst for Boeing. An investor who bought shares of Boeing in the beginning of September 2018, roughly two months before the crash of Lion Air Flight 610, would have seen the value of their investment decline by nearly 45% as of March 25. Meanwhile, an investor in Airbus would have had their wealth appreciate by more than 62% as the stock has been rallying ahead since recovering from the pandemic-induced fall.