Another chapter of the 737 Max saga has ended as Boeing (NYSE: BA) reaches a settlement with most the families of the victims who perish on Lion Air Flight 610. Even with the settlement handed out, Boeing's issues with the 737 Max, and its operations in general, are far from over.
Boeing reached a settlement with most of the families of the victims of Lion Air Flight 610, one of two fatal accidents involving Boeing 737 Max aircraft that triggered the worldwide grounding of the model and a comprehensive investigation by the National Transportation Safety Board. Of the 189 people who perished on the fatal flight, Boeing has settled claims with 171 of the families. It is unknown how much the settlements were, but Reuters reported potential amounts of $1.2 million per case.
The settlement concludes just some of the outstanding issues facing Boeing, however; the company still faces a great deal of adversity going forward. With regard to the 737 Max, the airliner's reputation is still deeply tarnished, so much so that many companies have postponed or outright cancelled orders of the jet. Of the latest cancellations were 92 jets to Norwegian Air Shuttle (OTC: NWARF) and 27 to Avolon, on top of 75 that were cancelled in April. Avolon, however, cited the coronavirus pandemic as the cause for the latest cancellations.
Boeing's efforts as of late have been a push to regain its lost reputation, a matter that the company may be able to focus on more now that it has settled most of its outstanding lawsuits. The 737 Max, however, remains the biggest obstacle to the company. Reputation and cancellations aside, the plane remains grounded across the world.
Getting the Max back in the air is a lengthy process that will require approval from dozens of aviation authorities in different countries. In the United States, Boeing's efforts were marred by missing several FAA deadlines. The company has finally met its most recent deadline, with the FAA currently undertaking test flights to determine if the plane is suitable to fly again. Approval from the FAA is a step in the right direction, but there's no guarantee foreign regulators would be as lenient. On top of testing, Boeing is responsible for repairing the many grounded planes around the world and replacing faulty wiring before they can return to service.
Even once this is completed, the entire airline industry is still struggling with reduced demand amid the coronavirus pandemic. The prospect of a V-shaped recovery is becoming more and more distant with each passing day, with concerns being raised about the soon-to-expire stimulus benefits and the surge of new infections in the United States. Even if companies hadn't cancelled scores of orders, Boeing would likely find it hard to sell its aircraft in an atmosphere where many companies are being forced to downsize to weather the pandemic recession.
Boeing remains optimistic in the face of adversity, however. CEO David Calhoun, who took over control of the company after the departure of Dennis Muilenburg amid the 737 Max scandal, has expressed optimism at the company's prospects.
"Our industry and our company will get through this. Air travel has always been resilient over the long term, and our portfolio of products, services and technology is well-positioned for the recovery that will come," Calhoun said of the company's prospects of weathering the pandemic.