INTRODUCTION
It took two tragic plane crashes five months apart to cause the world to ground the Boeing 737 Max fleet. Had the FAA inspected the plane properly, it would have found that Boeing chose not to equip the planes with proper sensors and failed to train pilots properly in the new equipment featured in the model, deeming the actual training that was completed unnecessary. The Boeing 737 Max created a variety of issues for critical stakeholders worldwide.
One major stakeholder tied up in this event was the shareholders of Boeing. Initially, following both plane crashes, Boeing’s stock value took a sharp drop. In October 2018, following the Lion Air Crash, the stock dipped to $304 per share and ultimately rose back up to $440 per share in February 2019. The shareholders thought their worst days were behind them and despite several Boeing 737 orders being cancelled, the stock had rebounded, and better days were ahead. Following the Ethiopian Air crash in March 2019, Boeing’s stock traded as low as $330 per share in August 2019. One would assume that these events would cause the stock to plummet further but in fact it’s interesting to see that the Boeing shareholders ultimately have been trading around the same value since February 2018. As a stakeholder of these horrible events, the shareholders didn’t face as big as a negative impact as one would suspect. This is a great example of how diversified Boeing’s product offering is that it can survive these catastrophic events and still maintain a large market capitalization.
Additional stakeholders in these events would be the airlines that were forced to ground their plains, as well as the airlines’ customers. Many airlines like United have had to shelve their fleet all together and have placed orders with rival Airbus. The hardest hit domestic carriers have been American Airlines and Southwest. Jacob Passy for CBS MarketWatch said, “Prices could go up especially for flights to or from cities that are hubs for Southwest and American Airlines, since those two airlines have borne the brunt of the Max grounding since they had more of those aircraft in their fleet than other domestic airlines.” As a result of the lack of equipment, airlines have been forced to rebook or cancel flights all together. With less capacity and demand increasing for the 2019 Holiday season, airlines are expected to increase fare prices, so ultimately the customer, a stakeholder, is left to pay for Boeing’s misdoings.
The customer as a stakeholder not only has to deal with less capacity and increase in fares, but also has to deal with the lack of faith it once had in Boeing’s iron clad image. Boeing was seen as an iconic American Company and a symbol of safety in the transportation; this once strong image is now shattered. David Schaper on NPR news said “Despite hiring the heavyweight PR firm Edelman to bolster crisis communications efforts, the campaign to win back the trust of air travelers thus far appears to have fallen flat. CEO Dennis Muilenburg’s recent testimony before two Congressional committees has been widely criticized as he struggled to answer questions that many industry insiders felt he should have been prepared for.” These recent events will play a major role in the foreseeable future as customers may fear flying on Boeing aircraft.
These tragic events are an example of corporate greed. The fact that Boeing executives knew of the mechanical flaws and did nothing to fix them is alarming and sinister. From a stakeholder’s perspective, it’s amazing to see that the Boeing stock didn’t lose as much value as one would assume. There is no doubt that the customers purchasing tickets to fly on these aircraft are a stakeholder negatively impacted by these events.
Biography:
Christopher Sibeni is an MBA student at Montclair State University. He specializes in sales management. He received his bachelors degree in Business Administration from Hofstra University in 2004.
Works Cited:
737 Max Scandal Cuts Boeing’s Once Rock-solid Image
David Schaper – https://www.npr.org/2019/11/26/783197253/737-max-scandal-cuts-boeings-once-rock-solid-image
Some American Airlines Flight Attendants Are ‘begging’ Not To Fly the Boeing 737 Max
Timeline: Boeing 737 Max Jetliner Crashes and Aftermath
Chicago Tribune – https://www.chicagotribune.com/business/ct-biz-viz-boeing-737-max-crash-timeline-04022019-story.html
Boeing 737 Max Grounding Puts Pressure on Airlines To Raise Prices This Holiday Season
737 Max Scandal Cuts Boeing’s Once Rock-solid Image
David Schaper – https://www.npr.org/2019/11/26/783197253/737-max-scandal-cuts-boeings-once-rock-solid-image
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