Monday, April 12, 2021
April 12, 2021

Linkedin Pinterest

In Our View: Orders may signal clearer skies ahead for Boeing

The Columbian
Published:

Good news for Boeing is good news for Washington. As the state’s largest private employer and creator of jobs at hundreds of vendor companies, the aerospace giant is essential for a soaring economy.

So it is notable that there has been some uplifting news this week for the troubled company.

On Monday, Southwest Airlines ordered 100 Boeing 737 Max 7 airplanes, sticking with the supplier that has been the backbone of its fleet for 50 years. The agreement will convert 70 previous orders for the 737 Max 8 to the slightly smaller version. Southwest’s fleet is made up exclusively of 737s.

The decision follows increased orders of the 737 from Alaska Airlines, United Airlines and budget carrier Ryanair in recent months, since a grounding of the 737 Max was lifted by the Federal Aviation Administration and regulators in other countries.

The plane was grounded following a crash in Indonesia in October 2018 and another in Ethiopia in March 2019. Investigations pointed to a troublesome flight-control system and revealed lax certification procedures by the FAA. In January, the U.S. Department of Justice ordered Boeing to pay $2.5 billion in fines and compensation, saying the company chose “profit over candor” in the crashes, which killed 346 people.

The latest orders are a vote of confidence for Boeing, which was founded in Seattle. Corporate headquarters moved to Chicago in 2001, but the company retains strong ties to Washington -including its largest production plant in Everett.

That vote of confidence is crucial in Boeing’s continuing competition with Europe’s Airbus. Between them, the companies dominate global airplane manufacturing. Following the Southwest order, Richard Aboulafia of industry analyst Teal Group told CNBC: “It would have been such a heart-attack moment if they went with the A220 – so much damage to Boeing … just losing the biggest customer of the 737.”

The grounding of the 737, questions about safety and a coronavirus-fueled downturn in air travel have created difficult conditions for Boeing. It posted a record $12 billion loss in 2020, with deliveries plummeting and canceled orders increasing. In December 2019, Boeing parted ways with its CEO, later revealing that his severance package was worth $62 million.

All of that points out the importance of the recent orders and provides hope that the company will return to solid footing.

But work remains to be done in terms of both safety and public relations. For an aerospace company those two are inextricably linked; confidence in a manufacturer’s ability to build safe planes is the currency on which its reputation is traded.

Boeing recently received approval to resume deliveries of its 787, which had been suspended because of concerns with the fuselage. Those planes are assembled in South Carolina, but public perception also impacts operations in the Puget Sound area. Meanwhile, the company’s 777X, which is assembled in Everett (the Legislature in 2013 approved tax breaks worth about $8.7 billion to keep the operation in the state) has suffered from numerous delays.

The hope is that recent orders signal clearer skies ahead for Boeing. While the company has violated the spirit – if not the letter – of its tax break by laying off thousands of workers in Washington, it still directly employs about 70,000 people in the state.

The present and the future of Washington’s economy is closely tied to the fortunes of the aerospace giant.

Loading...

Commenting is no longer available on Columbian.com. Please visit our Facebook page to leave comments on local stories.