Here's How Boeing is Flying Again

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I grew up thinking about how big a Boeing plane could be because my school seniors talked more about this brand. No! Not British Airways or Air India. Back then, I had a different perspective on Boeing 🤗

However, my views and thoughts about it changed, especially after 2 crashes in 5 months, leaving hundreds of them dead 😲 Soon, what people once wondered about became a brand they least cared for.

But how Boeing as a brand addressed this issue and came out as one of the safest flights to fly in just surprised the world.

What is it? How did Boeing address this issue?

Let's see!

Crisis Context

The crisis began with two deadly crashes involving Boeing's 737 MAX aircraft.

• First Crash: In October 2018, Lion Air Flight 610 crashed shortly after takeoff from Jakarta, Indonesia, killing all 189 people on board.

• Second Crash: In March 2019, Ethiopian Airlines Flight 302 crashed near Addis Ababa, Ethiopia, just minutes after takeoff, resulting in 157 deaths.

These two crashes were by the Maneuvering Characteristics Augmentation System (MCAS). It is a flight control software that prevents the aircraft from slowing down, and it malfunctioned in both incidents and forced the planes into a nosedive.

Aviation regulators worldwide, including the FAA, grounded the 737 MAX fleet in response. It affected over 400 planes already in operation and halted production of new 737 MAX aircraft. Here’s a news video covering the incident in Ethiopia:

The grounding and studies further exposed flaws in the design and certification process. All of this impacted the airline in several ways:

• Boeing faced lawsuits from victims' families.

• Its stock value dropped by over 40% between March 2019 and early 2020.

• The company reported a net loss of $636 million in 2019, its first annual loss in over two decades.

• The grounding cost Boeing $20 billion+ in direct losses, including compensation to airlines and production halts.

Do you know the MCAS system was initially not included in Boeing's pilot training manual, which led to insufficient pilot knowledge of how to handle its malfunction? That could be one of the reasons for crashes.

Crisis Management

Boeing’s initial response to the 737 MAX crisis was slow and widely criticized. At first, the company suggested the crashes were due to pilot error, but further investigations revealed flaws in the aircraft’s design, specifically with the MCAS software.

To manage the crisis, Boeing took the following steps:

1. Leadership change: In December 2019, Boeing fired its CEO, Dennis Muilenburg. David Calhoun replaced him in January 2020 to restore confidence in the firm.

2. Software Fix: Boeing made the required updates to the MCAS system. They redesigned the software to prevent it from activating based on faulty sensor data, which caused the crashes. Pilots also got more control over the system.

3. Public apology: Boeing publicly apologized to the victims' families and admitted to errors in the aircraft. Doing so repaired some damage to its reputation.

4. Compensation: Boeing set up a $100 million fund for the families affected by the two crashes to help them with financial difficulties caused by the tragedy.

5. Working with regulators: Boeing worked with the FAA and other aviation regulators to fix the issues. They improved pilot training to ensure they understood how to manage the updated MCAS system.

6. Debt financing: To cope with the financial impact, Boeing took $25 billion in debt financing in 2020 to deal with the necessary funds to survive the production halt and ongoing losses.

These actions allowed Boeing to regain trust with regulators, airlines, and passengers. However, the recovery process was long, and the company’s reputation remained damaged for years.

Recovery Process

Boeing’s recovery from the 737 MAX crisis was slow but focused on safety, trust, and financial stability. The recovery process included several actions:

• 737 MResults AX Re-certification

Boeing worked with global aviation regulators to fix the problems with the 737 MAX. The aircraft was permitted to fly again in November 2020 with a redesigned MCAS and proper pilot training to use the software.

• Returning the 737 MAX to service

By early 2021, airlines began flying the 737 MAX again. Boeing delivered about 130 of the grounded planes. By the end of 2022, over 500 737 MAX aircraft were flying worldwide and completed over 500,000 safe flights.

• New orders and deliveries

Boeing got new orders for the 737 MAX soon after in operation. The company received 600 new orders in 2021, including deals with Southwest and Ryanair. The number increased in 2022, helping Boeing regain its financial footing.

• Financial recovery

Boeing reported $66.6 billion in revenue in 2022. While this was lower than pre-crisis levels, this was an improvement from $58.2 billion in 2020. The company's debt had also risen to $58 billion due to the loans it took during the crisis.

• Focus on safety

Boeing made notable changes to its safety culture. In 2019, the company established a new product and services safety organization to ensure all aircraft designs meet higher safety standards. These changes applied to all of Boeing's future planes.

• Rebuilding trust

Boeing launched PR campaigns to rebuild trust with airlines, regulators, and passengers. They highlighted safety improvements and worked to show the 737 MAX was now one of the safest planes to fly.

Present Status: Boeing’s 737 MAX is fully operational by 2024, with over 700 aircraft delivered and more orders coming in. The company has stabilized, but the financial and reputational scars from the crisis remain.

Here’s a short video by Boeing that shows how it builds its planes:

Result

• After a difficult 2020 with only $58.2 billion in revenue, Boeing’s revenue increased to $66.6 billion by the end of 2022. While this was an improvement, it was still below the company's pre-crisis revenue of over $100 billion in 2018.

• Despite the crisis, Boeing delivered more than 700 737 MAX planes by 2024. New orders in 2022 alone accounted for over 600 planes.

• Boeing’s stock price dropped over 40% during the crisis. However, as of 2024, it has recovered approximately 30% from its lowest point.

• Boeing's debt rose to $58 billion due to the loans taken during the crisis. As of 2024, the company has been managing its debt while maintaining cash reserves, which totaled around $14.8 billion in 2023.

• By 2022, the 737 MAX had completed over 500,000 flights with no major incidents.

• Before the crisis, Boeing held a 48% market share in the commercial aircraft industry. Although it lost some ground to Airbus, by 2023, Boeing regained a 45% share.

Conclusion

Boeing's journey through the 737 MAX crisis tells the importance of transparency, accountability, and safety in marketing and brand management. Despite setbacks, the company's recovery efforts show that rebuilding trust and restoring reputation is a gradual process.

By prioritizing safety, adapting to challenges, and maintaining open communication, brands can become stronger and turn crises into opportunities for growth.

It's your turn now:

1. How can a company rebuild trust after a public crisis involving safety concerns?

2. What steps should be taken to balance short-term and long-term recovery strategies during a financial crisis?