Boeing has long been a central cog of the U.S. industrial machine.
Each year it sells $100 billion worth of aerospace equipment and services around the world and pays $45 billion to other U.S. firms. It is the world's largest aircraft-maker and the United States' largest manufacturing exporter.
Its commercial jets, which account for 60% of revenue, ferry millions of passengers. One in 100 U.S. workers toils either directly for Boeing, whose workforce numbers 137,000 in the U.S., or one of its 13,600 domestic suppliers, which employ a further 1.3 million people in mostly well-paid jobs.
In short, what is good for Boeing is good for corporate America.
A growing cost
The flip side is also true, as has become obvious in the wake of two crashes of Boeing's 737 Max aircraft, in October and March, which have been linked to a malfunctioning flight-software system, and which killed 346 people.
The human cost is immeasurable. The financial blow to Boeing itself, its suppliers and its airline customers is more tangible — and mounting.
The company has continued to churn out the troubled aircraft since its grounding by regulators in March. But it has not been able to deliver them to customers.
As a result Boeing's inventories have grown by $6 billion so far this year. The flightless planes fill all free space at its facilities, including car parking lots.
Add the knock-on cost for airlines and for the supply chain and a rough estimate is that every quarter that the bestselling airliner remains on the ground costs $4 billion. As the bill spirals an entire industry is now willing the plane to be back in the air by the end of the year.
Start with the airlines.
Pressure on airlines to cut costs made the fuel-efficient Max Boeing's fastest-selling model ever. Around 5,000 have been ordered since its launch in 2011 and nearly 390 delivered.
Southwest, which has 34 such planes, has canceled thousands of flights. In July it revealed a $175 million hit to pretax profits in the second quarter.
American Airlines, which has scrapped 115 or so flights a day, reckons that full-year profits will be $350 million lower as a result.
OAG, an airline-data firm, estimates that, globally, the grounding will cost airlines $4 billion in sales by November.
Some airlines have put the plane back in their schedules for November, on the assumption that once Boeing submits fixes to the faulty software in September, the Federal Aviation Administration (FAA) and its counterparts in other countries will allow a return to service before the end of the year.
This looks optimistic. Even if regulators approved the new software, it would take six to eight weeks to get planes out of storage and in the air. And as Jose Caiado of Credit Suisse pointed out, it is unclear whether pilots require retraining in flight simulators, adding more delays. Southwest, which aims to get the Max in the air by January, seems to admit as much.
In the meantime, airlines are plugging gaps with other planes.
Southwest is retiring seven fewer older, thirstier 737s from its fleet this year than it originally planned. United Airlines is pressing into service wide-bodied jets, which are costlier to run than single-aisle jets like the 737 and so generally reserved for long-haul routes.
Caught in the middle
Affected airlines can expect compensation in kind from Boeing, in the form of bigger discounts and better deals on other services. The same cannot be said of Boeing's suppliers.
Spirit AeroSystems, which gets around half its revenue from supplying fuselages for the 737 Max, saw margins slip and is cutting overtime and putting workers on unpaid leave to cut costs after "disruption in a complex production system," said its boss, Tom Gentile.
Allegheny Technologies, which makes composite materials used in the aircraft, has been similarly clobbered.
General Electric, the troubled engineering giant that supplies Max engines in a joint venture with Safran, a French aerospace company, faces a bigger bill. It is paid only when planes are delivered. It estimates that its cash flow could be reduced by as much $1.4 billion in 2019, adding to its woes. Safran's results for the first half of 2019, due next week, will be pored over for signs of trouble.
Most aerospace firms do not live by Boeing alone. That, and Boeing's decision to maintain production, has insulated them from a bigger fallout.
Then there is Boeing itself. The 737 fiasco has already led it to postpone plans to develop a new twin-aisle plane to replace the aging 757. Its share price has dropped by 25% in the past five months. It reported a record quarterly loss of $2.9 billion in the second quarter, after it set aside $4.9 billion for compensation for angry airlines.
It may need to allocate more toward other contingencies. Southwest's pilots have already sued Boeing for lost wages resulting from canceled flights. Crash victims' families are also preparing lawsuits.
Boeing can endure the financial pain for a while longer. Its duopoly with Airbus means that, in the short run, airlines and suppliers have little choice but to bear the costs stoically.
Many in the industry seem to share this conviction — regulators will not, the thinking goes, jeopardize Boeing's future because the company is too big to fail. Perhaps.
The FAA, roundly criticized for being slower than other regulators to ground the plane, and earlier granting Boeing wide-ranging powers of self-certification, is in no mood to prove them right.