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Marketplace Morning Report

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Sep 23, 2019

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Marketplace Morning Report

What impact is the 737 Max grounding having on Boeing?

Jack Stewart Jul 24, 2019
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Nadia Milleron, mother of Ethiopian Air crash victim Samya Stumo, shows a photograph of crash victim Julia Mwashi of Kenya during a hearing of the House Transportation and Infrastructure Committee's Aviation Subcommittee about the Boeing 737 Max airplane on May 15, 2019 in Washington, DC.
Chip Somodevilla/Getty Images

Boeing reported its biggest-ever quarterly loss on Wednesday — nearly $3 billion in the quarter to June. The company is still dealing with the grounding of its best-selling 737 Max jet. Regulators around the world barred them from flying in March.

Boeing is still working on a fix for the flight control software on the 737 Max after two fatal crashes less than five months apart. 

Analysts are unsurprised by the extent of Boeing’s loss. Chief executive Dennis Muilenburg said on a conference call that the company could consider further 737 production cuts as the Max crisis drags on.

“It is still very much an ongoing problem for Boeing, in a lot of ways,” says Dawna Rhoades, professor of business at Embry Riddle Aeronautical University. “Not only in terms of deliveries, but in terms of their customers, and what their customers are going to have to do in the near-term future.”

It’s not like airlines can just take their plane orders elsewhere. Airbus already has a backlog of orders for its A320, the natural competitor. Chad Ohlandt at the RAND Corporation says countries like Japan and Russia want to build a plane to sell in this market, but the most realistic competition could come from China’s state-owned aerospace manufacturer, COMAC.

“They are working on what’s called the C919, which should be a narrow-body, single-aisle competitor,” he said. “But that is not due in the market for at least five years.”

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