USAir, Boeing Will Pass Scrutiny
As investigators continue to search for a cause of the recent crash, the airline and manufacturer involved will likely lose early revenues but survive long-term, analysts say
| SEATTLE and PITTSBURGH
AN airplane disaster stirs up increased scrutiny and embarrassing questions for the affected airline and plane manufacturer. Last Thursday evening's crash of USAir Flight 427 outside Pittsburgh came at an especially vulnerable time for USAir and the Boeing Company, which manufactures the 737 jet.
Whose bottom line will suffer more?
USAir Group Inc. will lose revenue in the short term, analysts say. In the long term, however, ``airlines don't seem to suffer'' from airplane crashes, says Harold Shenton, vice president of Avmark Inc., a management-consulting company based in Arlington, Va.
Boeing's reputation should also survive the current scrutiny, analysts suggest. Past crashes of the DC-10 for awhile crimped sales for manufacturer McDonnell Douglas Corporation, but last week's accident, in which all 132 people aboard died, shouldn't dent the workhorse reputation of Boeing's 737 airplane series.
``Over 2,600 of those aircraft are flying worldwide,'' says Leo Janssens, president of the Aviation Safety Institute, a nonprofit watchdog group based in Worthington, Ohio. ``The safety record of the Boeing 737 is pretty good.''
It seems clear that Thursday's crash will set back USAir for several months. It is the fifth crash in as many years for the airline, which is headquartered in Arlington, Va. The accident occurred on the same day that USAir launched a new program to woo back badly needed business customers. The airline has not earned a profit since 1989.
Short-term revenue loss likely
Investors say they are worried that customers may avoid USAir flights. The company's stock lost 10 percent of its value on Friday, closing at $6 a share. The crash ``is going to cost them revenue in the short term,'' Mr. Shenton says. But come Thanksgiving, when travelers are scrambling for open seats, USAir's planes will be filled just like everyone else's, he adds.
Boeing, the Seattle aerospace giant, has also been struggling, though to a much lesser degree. Financial problems in the airline industry have caused orders for new aircraft to slump dramatically. Last week's crash coincided with the prestigious air show in Farnborough, England, where aerospace firms vied to show off their latest products and line up new customers. Boeing's biggest announcement at the show was for a new generation of 737s - the 737-700s, which can fly farther, faster, and carry more passengers than the 737-300 that crashed in Pittsburgh. Boeing's stock price fell less than 1 percent Friday.
The 737 has a reputation for being reliable and is the best-selling airplane in aviation history. More than 3,000 have been ordered since 1967, more than 2,600 delivered, and the ones in service make more than 17,000 flights a day worldwide, says Boeing spokesman Jerry Johnson. Of the 737s in service, about one-third are 737-300s. Southwest Airlines, the industry's most-profitable carrier, has a fleet made up entirely of 737s. Perhaps because of its status as a preferred jet, the 100-seat airplane has seen more crashes in recent years: 19 since 1988, including seven in the United States.
The Seattle Times reports that, despite its overall good record, the plane has been criticized for two flaws:
* About a year ago, the National Transportation Safety Board called for a fleetwide inspection of 737s to check on a cable that, when misrouted, can wear out and snap. This could cause a braking device to extend and affect the pilot's ability to control the plane.
* Another problem is a rudder-control valve that malfunctioned during a still-unexplained United Airlines crash in Colorado Springs, Colo., in 1991. A Boeing spokesman says it has been fixed on all 737s.
Investigators at the Pittsburgh crash site have found several pieces of the right engine that suggest it may have reversed some of its thrust in midair. Reversing an engine's thrust, which is designed to slow a plane down once it has landed on the runway, could cause catastrophe in flight, as it did three years ago with an Austrian Boeing 767 that crashed in Thailand. But investigators stress that it is too early to draw conclusions. They are still retrieving pieces of the plane, which may shed more light on what happened.
Only a small fraction of airplane crashes are attributed to problems with the jetliner itself. Far more often, pilot error is involved.
Rivals have had crashes too
Moreover, Boeing's key rivals - Airbus Industrie and McDonnell Douglas - have also suffered their share of crashes, reducing the likelihood of an all-out shift of orders away from Boeing. And while the market is slack now, Boeing predicts strong global demand for aircraft over the next two decades, fed by new noise regulations and increased travel in Asia.
The crash does raise overall concern about airline safety, which could influence the company's bid for ``extended twin-jet operations,'' or ETOPS, for its new 777.
Boeing wants early approval (by a year from now) for the two-engine plane to cross oceans, where it could be as much as three hours from the nearest airport. Like the 737, the 777 has an engine under each wing, but the ``triple seven'' is a much larger plane, carrying three times as many passengers.
While the company says overall performance in test flights has been very good, it is the company's first ``fly by wire'' jet, using electronic signals rather than systems of cables and pulleys to control steering. The plane's computer software programs are not yet finished. Also, several glitches in aerodynamics are being worked out, and an access panel under the belly of the plane has been coming off in flight, which, in one instance, caused important hydraulic fluid to drain out.
Analysts say the company and the commercial-aircraft industry, in general, have a strong overall safety record. Paul Dempsey, an aviation expert at the University of Denver, says commercial jets, including backup systems, ``are so resilient'' that air travel is much safer than automobile travel.
``Safety is always our highest priority,'' Mr. Johnson says.