Boeing’s Problem Isn’t 737 Max Crash Victims But Companies

This of course sounds rather cruel to have to point out but Boeing’s financial problem isn’t with those who died on those two crashes of the 737 Max. Direct losses and compensation like that are limited by the Warsaw Convention for a start.

The big problem is going to be airlines, who can’t use their 737s while all this investigating and working out goes on. As I’ve pointed out elsewhere:

That Boeing (NYSE:BA) has a problem with the 737 Max is obvious enough. The Lion and then Ethiopian crashes tell us that much. But there’s not necessarily a bigger problem here, merely uncertainty about how big the problem might be. Or, even, whether there is a problem to be uncertain about.

That being, well, airlines which have bought the 737 Max can’t currently use them. Or at least in many places they cannot. This implies costs for said airlines – who is responsible for those costs? That depends on how the blame for the 737 Max problems is apportioned in the end of course. But I think we all know there’s a significant risk it’s going to be Boeing itself. That’s not the end of it, though. If blame is assigned to Boeing, then sure, the compensation bill to the families of those who died will end up in Seattle, where it may or may not be insured, but probably is. But what about those losses of airlines which cannot fly the planes they’ve bought and still must pay for? And the costs of renting replacement planes to keep the schedules going?

That’s actually the big question here.

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