Boeing in crisis as airlines ponder 737 Max 8 orders

The loss of confidence in Boeing’s 737 Max 8 aircraft could cost the aircraft manufacturer billions of dollars.

A Boeing 737 MAX 8 for China Southern Airlines, front, pictured at the Boeing factory in Renton, Washington. Picture: AFP

The loss of confidence in Boeing’s 737 Max 8 aircraft could cost the aircraft manufacturer billions of dollars as airlines reconsider ­orders, fearing passengers will ­refuse to fly in the planes.

Virgin Australia, Lion Air and Garuda Indonesia are all reviewing their orders in the wake of two fatal crashes in five months involving the near-new 737 Max 8s.

Since the most recent crash, on Sunday, involving Ethiopian Airlines, aviation safety regulators in Britain, Europe, Australia, China, India, Indonesia, South Korea and Singapore have temporarily grounded the aircraft or banned them from their airspace.

The US and Canada were the only two mass markets where the 737 Max 8s were still flying until this morning when both countries joined other nations groudning the planes.

A Virgin Australia spokesman said the company would not introduce any new aircraft to its fleet unless it was completely satisfied with its safety.

“We are closely monitoring the situation and will continue to work with Boeing, the Civil Aviation Safety Authority and other relevant authorities as more information becomes available,” the spokesman said.

The airline has 30 Boeing 737 Max 8s on order, worth an estimated $5 billion, with the first due to be delivered in November.

The Australian understands Virgin is as concerned about public perceptions of the safety of the aircraft as it is about the apparent technical problems experienced by pilots before crashes in Indonesia and Ethiopia.

Incoming chief executive Paul Scurrah is expected to make the future of the 737 Max 8 order one of his first items of business when he takes charge on March 25.

Lion Air is reportedly seeking to cancel its order for 222 737 Max aircraft, including the 8, 9 and 10 variants, worth $31bn.

The low-cost carrier was in talks with Boeing with a view to possibly changing the order to other types of planes.

Garuda Indonesia had 49 737 Max 8s on order and was also seeking to switch type.

IBISWorld senior industry analyst Tom Youl said Boeing’s order book for the 737 Max family ran to 5000 aircraft worth $500bn at list prices.

“Most of the major airlines in China have sizeable orders and I certainly see some concerns there for Boeing if those airlines pull out,” Mr Youl said.

“I should imagine some people at (rival manufacturer) Airbus will be looking to pick up the slack until there are some certainties around the 737 Max 8.”

Mr Youl said it was almost impossible to put a dollar value on the perception of safety in the aviation industry.

“Safety is often the most important measure when you survey consumers about what they look for in an airline,” he said.

“It is of paramount importance for Boeing to do anything they can to assure people about the safety of the 737 Max 8.”

A statement issued by Boeing yesterday said the company “understood regulatory agencies and customers had made decisions they believe are most appropriate for their home markets”.

“We’ll continue to engage with them to ensure they have the information needed to have confidence in operating their fleets,” the statement said.