Boeing takes hit to its reputation after 2 plane crashes


NEW YORK (AP) — In an era of unprecedented airline safety, Boeing’s newest version of its best-selling airliner has crashed twice in less than six months, killing 346 people and delivering a massive blow to the company’s reputation.

More than 40 countries either grounded the planes or refused to let them into their airspace after determining that Sunday’s crash of a 737 Max 8 in Ethiopia bore enough similarities to Indonesia’s Lion Air crash of the same model in October. After holding out for several days, the U.S. Federal Aviation Administration issued an emergency order grounding the planes.

Boeing’s reputation is damaged not only because of the crashes, but also its decision not to voluntarily ground the planes itself as country after country pulled them from the sky.

The company’s finances will take a hit as it faces lawsuits from victims’ families, compensation claims from airlines, delayed revenue from missed plane deliveries and the expense of figuring out what went wrong and then fixing its planes.

But the airline industry has a long history of recovering from tragedy, and experts say the disaster is unlikely to have a lasting impact on Boeing’s brand or finances.

John McDonald, founder of crisis management firm Caeli Communications, was a former flight attendant in charge of communications for TWA when an airliner — also a Boeing — exploded and crashed into the Atlantic Ocean off Long Island in 1996. McDonald lost colleagues in that crash, which killed 230 people.

“If you look at past history of when they’ve had any issues with aircraft, they fix the problem and they move on,” McDonald said. “It’s very, very traumatic, but aviation safety is built on the blood of victims, and that’s how you learn these lessons. The real challenge is to make sure you understand what the problem is before you start putting in fixes.”

The groundings will have a far-reaching financial impact on Boeing, at least in the short term. There are more than 4,600 Boeing 737 Max 8 planes on backlog, and they won’t be delivered until Boeing has fixed any problems and the ban is lifted.

Boeing paused deliveries of the 737 Max, but continues to build the airplanes, said company spokesman Charles Bickers. It is assessing how the situation, including potential capacity constraints such as where to park the planes while they wait to be delivered, will impact its production system.

Boeing shares were down more than 11 percent this week through Thursday, and had lost about $29 billion in market value. The shares still have outpaced the market in 2019.

In grounding the planes in the U.S., President Donald Trump on Wednesday said the decision “didn’t have to be made, but we thought it was the right decision.”

“Boeing is an incredible company,” Trump said. “They are working very, very hard right now and hopefully they’ll quickly come up with an answer.”

Boeing says it recommended to the FAA to temporarily suspend operations of the entire global fleet out of an abundance of caution and to reassure the public of the aircraft’s safety.

In an internal memo, Boeing CEO Dennis Muilenburg told employees he understands “this is difficult for our teams, especially all those who directly support the 737 program,” but added, “we continue to have full confidence in the safety of the 737 MAX and our teams who design, build and support it. This decision doesn’t change that.”

Some analysts say airline customers are unlikely to cancel orders of the plane, which are long-term agreements that can take a decade to fulfill, because those financial agreements are already in place and, other than Airbus, there aren’t competitors offering an alternative to the Boeing 737 Max.

“The bigger and more reputational issue for them is, how do you sell more of those planes in the future?” said Paul Argenti, professor of corporate communications at Dartmouth’s Tuck School of Business. “The Lion Air crash puts in motion that something’s wrong, what are we going to do about it, and by the time the Ethiopian plane goes down, it should have been resolved.”

Norwegian Air’s CEO says he will seek compensation from Boeing for the disruption caused by the groundings, and other airlines may follow suit. Whether airlines would be successful with such claims depends on the details of the contracts those carriers have with Boeing, said Dan Rose, partner at Kreindler & Kreindler, an aviation law firm that has represented victims’ families in other crashes.

Southwest has a long history with the 737 and the airliner has a stellar safety record, the airline’s CEO Gary Kelly said Thursday. He said the company’s history with the Max has been phenomenal, and nothing has presented any flight concerns.

While countries around the world grounded the Max 8 ahead of the U.S., some fliers frantically tried to figure out whether they were going to be flying on a Max 8, and if so, how they could switch.

It was Boeing’s job to restore confidence among travelers but by waiting for others to ground the planes, it created the perception that it wasn’t putting the passengers’ safety first, said Joshua Kroon, vice president of Levick Strategic Communications, a crisis communications firm.

“The natural conclusion is they only care about making money, they don’t care about my safety,” Kroon said.

Rhode Island impact

At Warwick’s T.F. Green airport, two airlines fly the Max 8 jets: Norwegian and Southwest. The Rhode Island Airport Corporation said it was impossible to know exactly what the impact would be to flights there, since there could be a ripple effect from airports across the country and the world.

Kayley Boucher, a woman from Warren who goes to URI, said her flight home from Ireland on Norwegian Airlines next week was canceled. The airline re-booked her on a flight to Stewart Airport in New York, telling her a bus would take her from Stewart to Providence.

“It kind of alters my plans because I was planning on being back on Wednesday for my night class,” Boucher said in a FaceTime interview from Dublin. “But now a four hour ride from New York won’t let that happen.”

Other passengers gathered at T.F. Green on Wednesday, either trying to get re-booked or waiting for a bus to shuttle them to Stewart.

“There’s been absolutely no communications,” said Julia Nouvertne, who drove down from Maine only to find out her flight from Green was canceled. “I’m an old lady, I’m tired of hanging out here and not knowing what’s going on.”


AP Writer Alex Olson contributed to this report.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


Coronavirus: Complete Coverage

More Coronavirus

Dan Yorke State of Mind

DYSOM: Craig Sculos V.P. Bally's Twin River Resort Casino

More Dan Yorke State of Mind

Don't Miss


More Live Cams
Viewer Pa on