In March 2019, the world watched as the fallout over two crashed Boeing 737 Max 8 planes unfolded. Aviation authorities the world over grounded the entire range of Max planes after 346 people on the Lion Air and Ethiopian Airlines flights were killed in the space of five months. The repercussions of this tragedy on one of the world’s largest aircraft manufacturers, and the global aviation market, have been significant.
By May 2018 the Boeing 737 Max range had been in service for a year, with 130 planes active across 28 different airlines. Research shows that before grounding, the 737 Max range was completing 8,600 flights a week and had carried 6.5 million passengers up to that moment. As such, aviation lawyers report that the grounding “has, for a lot of airlines, taken a great deal of capacity away from their fleets”. This has affected legal practice in several ways.
Firstly, sources report that the Boeing grounding “has had a major impact on aviation work as airlines, pilots and regular consumers have all been affected by the grounding causing a downturn in capacity”. This has translated into “a large amount of commercial legal work” as “many contracts in the space are now being disputed, and all parts of supply and service chains have been affected”. In short, lawyers stress that “everything to do with Boeing is being contested”. The airline manufacturer has set aside $4.9 billion for airline compensation claims, and $100 million for victims as a result of numerous claims being launched in several jurisdictions. As such, market commentators tell us, “Firms are extremely busy currently with these claims, although it is still early days.” This hints at yet more litigious action for the aviation giant. Secondly, groundings have led to airlines “having to go into the leasing market to complete their summer schedules, which has translated into quite a lot of activity for lawyers”.
It is unsurprising that Boeing has seen a dramatic downturn in orders for its new Max range, previously the fastest-selling plane Boeing had made with over 5,000 orders before March 2019. Orders have fallen sharply from 180 to 95 aircraft in the first quarter of 2019, with 93 cancellations so far. As well as the safety issues of the planes themselves, this could also reflect a global trend highlighted by aviation specialists that we spoke to: namely, a pronounced international “slowdown in aviation orders, as clients look for alternative ways to acquire assets”. It appears that the beleaguered aircraft manufacturer is now starting to cauterise the wounds of the disaster, with Air Astana placing a $6 billion 737 Max order in November 2019. However, the FAA has confirmed that its analysis of 737 Max planes will be extensive, with hundreds of individual planes to be inspected. It is safe to say that the ramifications of the two crashes will continue to generate work for lawyers in the aviation space for years to come, and with a hardening global market where lawyers see “more repossessions and lease defaults”, Boeing may yet leave the frying pan to enter the fire.