The Most Important Story in Airlines in 2019

After two Boeing 737 Max airplanes crashed within five months, Boeing’s leaders may have thought they could deny responsibility and skirt the fallout unscathed. They were wrong.

After the second crash, in March 2019, regulators worldwide grounded the airplane. First, Boeing executives downplayed the severity of their issues, suggesting regulators had banned Max flights more from an abundance of caution than real concern. Within a couple of months, however, the public learned Boeing had made serious errors in its design. Perhaps worse, Boeing might have known of its mistakes but may have rushed the airplane to completion to appease airlines and keep pace with Airbus.

All that would have been bad enough. But there was more: As this process unfolded, travelers learned the U.S. Federal Aviation Administration gave Boeing wide latitude to certify its own safety mechanisms. Many members of Congress were not happy, and they pushed federal regulators to clamp down on Boeing. 

The result has been one of the most serious and prolonged aircraft groundings in aviation history. Airlines have been hampered, with many canceling flights for months and curbing growth plans because they could not fly all the aircraft they expected. Most adapted, and some investment analysts credited the Max groundings for spurring stronger financial results from major U.S. airlines, because fewer flights means more pricing power. A few airlines, like Southwest Airlines, which has an all-737 fleet, have been disproportionately affected, but even Southwest has handed the grounding well.

Boeing is another matter. The more than century-old aerospace company had built a reputation as one of the world’s most adept manufacturers, churning out safe, reliable airplanes that airlines and their passengers trusted. Now its market position is suffering, and the company has had to take drastic action. Boeing in mid-December announced what it said was a short-term suspension of its Max production line. And following blistering editorials from leading business outlets citing mismanagement of the crisis, CEO Dennis Muilenburg resigned Monday. Chairman David Calhoun will replace Muilenburg as CEO on January 13.

Boeing isn’t going out of business, but it will need to spend 2020 working on restoring the reputation of its commericial airplanes division. It must persuade stakeholders it has made real and lasting change.

It should have ample opportunity. Barring another major issue, Boeing should get the Max back into the air at some point in 2020, though the timing is a mystery. When it does, it will need a public information campaign to win back public trust. It’ll have to persuade airlines and flyers it’s no longer the same company that rushed an airplane to completion and then let airlines fly it without proper pilot training.

Boeing should be able to bounce back, if only because it has little competition. Airbus is the only other major aircraft manufacturer, and while it has gained share at Boeing’s expense, there’s a limit to how much it can grow. Most carriers prefer to see robust competition between Airbus and Boeing, part of the reason International Airlines Group, owner of British Airways, said in June it wanted to buy as many as 100 Max jets.

Still, Boeing must act decisively. It spent too much of 2019 in denial mode, with executives perhaps hoping the problems would disappear. They did not, and the company’s reaction to the Max crisis cost it dearly. It cannot repeat its mistakes in 2020.