When Harm Goes Beyond the Obvious: Analyzing the Boeing 737 MAX Disaster

The 737 Max debacle harmed an entire aviation ecosystem of investors and service providers. In what was unquestionably an unmitigated disaster, the Boeing 737 MAX passenger airliner was grounded worldwide between March 2019 and December 2020 after 346 people died in two crashes, Lion Air Flight 610 on October 29, 2018, and Ethiopian Airlines Flight 302 on March 10, 2019. Not only were these crashes horrific for those who died or lost loved ones in the crash. Boeing itself claims that the entire affair has cost it more than $20 billion. And the damage goes far beyond Boeing and the families of the crash victims.

For example, in November 2021, Boeing Co. directors agreed to a $237.5 million settlement of shareholder claims that Boeing’s directors harmed shareholders’ investments in Boeing when the directors turned a blind eye to safety issues related to 737 MAX. The grounding of the 737 MAX was also catastrophic for those who relied on the MAX for their livelihood. The airlines themselves suffered grievous harm. Take Southwest Airlines as one example. They reported a loss of up to $828 million in 2019 associated with the MAX grounding.

There is an entire ecosystem of individuals and businesses in the aviation industry—from investors, to airlines, and maintenance and other service providers—that depended on the 737 MAX, and that were deprived of revenue by its well justified grounding after the crashes.