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International turbulence ahead for Boeing following second 737 MAX 8 crash, reveals IBISWorld

March 14, 2019 Aviation No Comments Email Email

The Ethiopian Airlines crash is anticipated to have little to no effect on the Australian Aircraft Manufacturing and Repair Services industry. http://www.stevecafeandcuisine.com/Boeing Australia Holdings is estimated to hold 31.8% market share in 2018-19, with the industry expected to generate $4.9 billion in the same year. However, the company’s substantial domestic operations are predominantly composed of component manufacturing for the 787 Dreamliner, support and maintenance services to the Australian Defence Force and training services.

On the other hand, recent controversies are expected to affect the company’s operations in the US market. The Boeing Company is expected to account for 36.9% of the Aircraft, Engine & Parts Manufacturing industry, which is anticipated to be worth US$212.4 billion in the year ending December 2018.

Boeing has stated it is confident in the safety of its aircraft but plans to roll out software upgrades in its 737 MAX 8 aircraft in the coming weeks. This announcement comes in response to a US Federal Aviation Administration statement which outlined mandated anti-stalling software and manoeuvring system updates by April. Boeing’s US entity may face a revenue shortfall in the immediate-term, should airlines cancel or delay order of the 737 MAX 8. Global orders for the aircraft are estimated to be at almost 3,000.

The Ethiopian Airlines crash marks the second fatal crash for the aircraft after a Lion Air flight went down in October 2018. No Australian airline currently flies the 737 MAX 8, but Virgin Australia has 30 on order, to be delivered between 2019 and 2021. Virgin is yet to determine the impact of this crash on its pending order. However, Virgin may be under pressure to accept the order to maintain capacity in domestic routes, or else continue operating older aircraft which are less fuel-efficient and impacting profitability.

In response to the incident, The Civil Aviation Safety Authority (CASA) has suspended operation of all Boeing 737 MAX models flying in and out of Australia. According to the Authority, this ban is temporary, until all safety risks have been reviewed. Several international airlines and aviation authorities have implemented similar suspensions, including the UK Civil Aviation Authority and Singapore’s Civil Aviation Authority. Only Silk Airlines and Fiji Airlines operate the aircraft on Australian routes. Although Fiji Airways is continuing to operate the aircraft in other markets, the CASA suspension supersedes this for Australian operations.

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