A 737 Max typically sells for about $55 million. Under the worst-case scenario for Boeing is that it could lose as much as $44 billion in revenue from the drop in sales.
Experts say Boeing will eventually sell those planes, albeit it at a steep discount, perhaps even to the same customers who are now canceling their orders. So even if Boeing doesn’t lose the full $44 billion from canceled orders, the lower pricing on the Max could cost it tens of billions.
Boeing won’t comment on sales prices for any of its planes.
And then there are Boeing’s the increased borrowing costs — Boeing took on tens of billions in debt during the crisis, most of it at about a 5% interest rate. That means the interest will pile up by perhaps $3 billion or $4 billion, said Chris Denicolo, aerospace credit analyst with Standard & Poor’s.
Beyond those hard costs there remains the question of how the crisis has affected Boeing’s competitive position.
Boeing desperately needed a new offering to compete with the A321XLR, said Richard Aboulafia, aerospace analyst for the Teal Group. The duopoly enjoyed by Boeing and Airbus makes it unlikely that either company will go out of business. But not being competitive with Airbus in this key part of the market is a serious long-term threat to Boeing, he said.
“It could end up with only 25% to 30% of market,” he said. “It doesn’t mean you go away, but you’re a lot less profitable, a lot less relevant.”
A fateful anniversary
Several family members of the crash victims met with US Transportation Secretary Pete Buttigieg Wednesday to express their concerns over the US approval for the plane to fly again. Others said the dollar cost of the 737 Max crisis don’t begin to measure what they lost.
“We lost the most beautiful, caring, active, thoughtful, intelligent person,” said Chris Moore, of Toronto, whose 24-year old daughter, Danielle, was killed on the Ethiopian jet. “The true cost of this loss is immeasurable, but this cost accrues to the family of Danielle Moore every minute of every day and night and especially during sleep. These costs are real.”
The longer those groundings last, the more problems, and costs, for Boeing.