Boeing’s 737 MAX Jet Is Cleared for Takeoff
Changes to the Boeing 737 MAX
The Federal Aviation Administration announced yesterday that Boeing’s (BA) 737 MAX jets have passed safety tests and are cleared to carry passengers. The planes have been grounded since March 2019 when two crashes in Indonesia and Ethiopia took 346 lives.
The crashes were caused by problems with software in the planes called MCAS. Over the past 20 months, Boeing has made changes to the software and to the jets’ design. The company also created new flight crew training. Regulators in other countries are still conducting safety reviews of the updated aircraft, but now that the FAA has made its announcement other regulators are likely to follow its lead.
Financial Difficulties for Boeing
Though the FAA’s decision comes as a relief for Boeing, the company is still facing severe difficulties as a result of the pandemic. Airlines are struggling with weak demand, and many are canceling or postponing aircraft orders to save cash. This has left Boeing with a glut of supply of 737 MAX jets and other planes.
Boeing currently has about 450 completed MAX jets in stock. It expects to sell roughly half of them by the end of next year and the remaining ones the year after. Boeing plans to keep its production low until it is able to sell the planes it already has in stock. As a result, the company has consolidated a number of its factories and is in the process of cutting roughly 30,000 jobs.
Boeing’s Shares Rally
Boeing and airlines are already trying to help customers feel safe flying as COVID-19 infections rise. Now they will also be working to show travelers that the updated 737 MAX jets are safe.
The 737 MAX jet is a single-aisle plane which airlines use for short to intermediate distances.
At the moment, due to worries about COVID-19, many consumers are choosing to drive rather than take short flights which would use 737 MAX jets. Airlines and Boeing are hoping that travelers will have confidence in the improved 737 MAX jets.
Despite these difficulties, investors seem more hopeful about Boeing’s future than they did in the early months of the pandemic. The company’s shares have climbed more than 40% so far this month and gained 3% after the FAA’s announcement yesterday.
Apple Reduces Its App Store Fees
Apple Will Charge Small Developers a 15% Commission for App Store Transactions
Apple (AAPL) announced that in 2021 it will cut its commission charges in half for small software developers selling products on its App Store. For companies generating under $1 million in revenue through the App Store, Apple will take a 15% fee rather than a 30% fee. For companies with sales on the App Store over $1 million, Apple will continue to take a 30% commission.
Apple’s App Store allows users to download apps onto over 1.5 billion devices around the world. In 2019 $519 billion worth of transactions happened on the platform and 85% of that money went to third parties. However, the company's practices related to its App Store have faced significant criticism from private companies and governments. Many say that the recent change is not doing enough.
App Developers Respond
Apple’s App Store policies have caused the company to clash with a number of high-profile developers who use the app marketplace. Epic Games, the creator of the popular video game Fortnite, sued Apple earlier this year after Epic tried to get around paying the App Store commission and Apple banned Fortnite from the platform. Epic, Match Group (MTCH), which owns Tinder and Hinge, along with Spotify (SPOT), and other app developers founded a nonprofit called “The Coalition for App Fairness,” which is pushing for legal action to change Apple’s App Store policies.
The coalition stated in a tweet that Apple’s policy change is merely a “symbolic gesture,” and that the company needs to take more significant action to make the App Store a fair marketplace. It also said the $1 million cutoff is an arbitrary line to draw.
Scrutiny from Governments
Apple has faced antitrust scrutiny from the Justice Department, the Federal Trade Commission, and the European Union recently. The company has also faced accusations of anticompetitive behavior from Congress, along with other big tech companies.
Most of these regulators have not yet commented on Apple’s decision to change its App Store commission, but the company’s choice is likely to come up in future discussions between Apple and lawmakers around the world.
The Pandemic’s Impact on the Recycled Paper Industry
Less Office Paper, More Takeout Containers
New habits formed during the pandemic have caused changes for paper and cardboard mills. Because so many people are working from home, these companies are dealing with a shortage of recycled office paper. But because consumers are ordering more products online and more take-out food, mills have access to more discarded boxes, which they are making into toilet paper, coffee cups, paper towels, and other products.
The collection volume from US residential recycling programs has risen at least 7% this year compared to last year. This is partially a result of more ecommerce, which requires cardboard delivery boxes. Despite the surge in scrap cardboard supply, the price of recycled cardboard has also climbed this year as more companies invest in equipment to process the resource. Mixed paper for recycling cost next to nothing at the beginning of the year and it now costs about $30 per ton.
An Abrupt Change
Trends in the mixed paper market have changed abruptly. Two years ago the price of scrap paper and cardboard plummeted after China changed its contaminants limits. The country used to process two thirds of mixed paper collected in the US. However, the new restrictions meant that much of the US’ recycled products could no longer be sold to China.
Many US waste management companies were losing money on their recycling operations because they were unable to sell materials to China. Now, however, there is more scrap cardboard available, and US plants are investing in better screening technologies to be able to process it.
With new technology, companies are able to process a wider variety of materials. For example, WestRock, an Atlanta-based company, is encouraging consumers to recycle pizza boxes. There are over 3 billion pizza boxes produced in the US each year. In the past, these boxes were difficult to recycle, but new systems can turn these boxes into pulp even if there is food residue on the cardboard.
Similarly, Georgia-Pacific, which makes Dixie cups, Brawny paper towels, and other products, recently invested $45 million in sophisticated pulp-making plants. These plants are able to process a variety of recycled materials. For example, they can filter out the thin plastic on the inside of paper coffee cups in order to turn the cups into pulp, and then into new products. Lifestyle changes resulting from the pandemic have had unique ripple effects across innumerable sectors of the economy, including the recycled paper industry.