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Boeing struggles to contain crisis from second 737 Max crash

Mar 12 2019 11:48
Julie Johnsson, Alan Levin and Ryan Beene, Bloomberg

Boeing and US regulators grappled with a crisis of confidence in the 737 Max that moved with the speed of an Internet rumor after the second deadly crash of the model in five months.

Breaking precedent, regulators in China grounded the revamped narrow-body plane before an international team of investigators had a chance to review flight data and cockpit voice recorders recovered after a brand-new Ethiopian Airlines 737 Max 8 plunged into a hillside minutes after takeoff Sunday.

The US Federal Aviation Administration said Monday that the jet model remains airworthy.

Boeing tumbled the most on the S&P 500 Index as questions swirled around the newest version of its 737 family, a cash cow that generates almost a third of the company’s operating profit.

The Ethiopian disaster that claimed 157 lives this weekend followed the crash of a Lion Air 737 Max off the coast of Indonesia in October. That delivered a one-two punch for an aircraft type that has ranked among the world’s safest since it started flying in the 1960s.

“Boeing has lost control of the timetable to provide the safe, reliable solution,” said Neil Hansford, chairman of the Australian consultant Strategic Aviation Solutions. “The longer it goes, the more chance Boeing has of losing orders.”

Boeing sank 5.6% to $399.03 at 15:39 in New York after paring losses earlier in the trading session of as much as 13%. That was the biggest intraday decline since September 17, 2001, the first day of trading after the 9/11 attacks.

The grounding in China, followed by the Indonesian air safety regulator’s order to halt 737 Max flights starting Tuesday, raised the question of whether other countries would follow suit. Some carriers, including Ethiopian, parked their Max jets. South Korea began a special inspection of the aircraft.

In Europe and Canada, regulators said it’s too soon to take action as they scrutinise the next steps in contact with their US counterparts. The FAA will issue a “continued airworthiness notification” for operators of the 737 Max.

“The FAA continuously assesses and oversees the safety performance of US commercial aircraft,” the agency said in a statement. “If we identify an issue that affects safety, the FAA will take immediate and appropriate action. ”

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