Boeing Keeps Paying 737 Max's Engineering Debt

The Boeing 737 jetliner, introduced in 1968, remains one of the most utilized commercial aircraft 56 years later, albeit with several modifications.

In contrast, its competitor, the Airbus A320, was introduced in 1988, making it 20 years younger.

As someone who is not an aviation expert, but from a passenger's perspective, I feel uneasy about heavily modifying an old design. It seems akin to applying a 'Band-Aid' solution.

The primary driver behind these modifications was competition. Airbus introduced the A320Neo, equipped with a LEAP engine - a significantly more efficient engine that promises substantial fuel cost savings for airlines.

Faced with no ready alternative and recognizing that designing a new model would take years, Boeing was pressed for time to compete with Airbus.

Their solution was to adapt the new and larger engine to their existing model, leading to modifications in the airframe and the introduction of the 737 Max series. However, they assured that the aircraft would handle identically to its predecessors to avoid the costs of pilot retraining. This was achieved by integrating software that could override the pilots' controls.

Tragically, two crashes of the 737 Max 8 occurred in 2018 and 2019. Both incidents were attributed to hardware malfunctions and poorly designed software, which caused the planes to override pilot inputs and catastrophically descend.

These crashes exposed the dangerous compromises Boeing made in the pursuit of competition and cost-efficiency.

Although the 737 Max was cleared to resume flights in 2020, a recent incident involving an Alaska Airlines-operated Boeing 737 MAX 9 has raised concerns. Just a few days ago, a panel, which was a substitute for an actual emergency door, came off in mid-air. Fortunately, there were no seats adjacent to this panel, and only minor injuries were reported without any fatalities.

In response, the FAA ordered the temporary grounding of 171 Boeing jets equipped with the same type of panel.

This incident occurs against the backdrop of Boeing facing production delays for the 737 Max, especially as travel demand rebounds post-pandemic. Such pressure could potentially lead to rushed production processes.

This incident represents another setback to the already shaken confidence in the 737 Max, likely affecting Boeing's share price, though the impact may not be as severe as it was following the previous fatal crashes.

Airlines with grounded 737 Max jets will also face challenges. The 737 Max is primarily used for short-haul domestic flights. Southwest Airlines, the largest operator of the 737 Max, has a fleet of 220 aircraft with an additional 560 planes on order.

Boeing and these airlines are somewhat tied to the 737 Max and must address any future issues that arise. Boeing has accumulated significant engineering debt with the 737 Max, making it unlikely they will resolve these issues comprehensively.

Given these ongoing challenges, I would be hesitant to invest in Boeing stock. While Boeing's defense sector may be more robust, the commercial segment is notably dragging down its overall performance.

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