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OVERVIEW: Boeing crisis grows as 737 Max ban ripples around the globe

Mar 13 2019 14:16
Kyunghee Park and Angus Whitley, Bloomberg

Boeing grappled with more groundings of its most important airliner as operators from Brazil to South Korea idled the 737 Max following a second deadly crash, throwing the US manufacturer deeper into crisis.

After China became the first major market on Monday to halt take-offs and landings of Boeing’s latest single-aisle model, flight halts quickly cascaded around the globe.

Singapore barred all 737 Max service in and out of the city-state, a move that was followed by Australia and Malaysia.

Elsewhere in Asia, a South Korean carrier suspended its 737 Max planes, while two airlines in Latin American also halted operations of the jet, which entered service just a few years ago and has become Boeing’s fastest-selling aircraft, with nearly 4 700 orders. The suspensions have put about a third of the 350-strong global fleet out of action.

In a sign that the tragedy in Ethiopia, which killed everyone on board, threatens to become a commercial fiasco for Boeing, launch customer Lion Air is said to be considering a complete switch to Airbus SE planes, a person familiar with the discussions said, with the carrier suspending further 737 Max deliveries this year.

The fallout from the crash has weighed on Boeing’s stock. The shares slumped 5.3% on Monday and fell another 3.6% before the start of regular trading Tuesday in the US, as investors weighed the backlash against an aircraft that brings in close to a third of total operating profit.

The zero-risk approach by airlines and aviation authorities in South America and Asia contrasts with assurance by US regulators that the aircraft remains airworthy. The crash has spooked airlines and passengers and eroded faith in the widely flown jetliner because the disaster in Ethiopia bore similarities to the first crash of a 737 Max just five months ago. In both cases, the aircraft crashed minutes after takeoff as the pilots failed to maintain control.

While the flight-data and cockpit-voice recorders have been recovered from the crash site, little is know at this point about the final fateful moments of Ethiopian Airlines Flight 302, which was en route from Addis Ababa to Nairobi, Kenya, with 157 people on board.

Africa’s largest carrier took delivery of its first 737 Max at the end of June as part of an upgrade of its fleet, which also includes Boeing’s twin-aisle 787 Dreamliner and the larger 777 model.

The bans in Singapore and Australia mean that the newest version of Boeing’s best-selling model is now blocked from a key long-distance travel destination as well as Singapore’s Changi, Asia’s second-busiest international airport and a popular transit hub. The country’s aviation regulator will “gather more information and review the safety risk associated with the continued operation of the Boeing 737 Max aircraft into and out of Singapore,” according to a statement.

The US Federal Aviation Administration on Monday issued its support of the aircraft, saying the plane remains safe to fly and that there wasn’t conclusive evidence so far to link the loss of the Ethiopian 737 Max 8 on Sunday and the fatal Lion Air disaster. The planemaker echoed the FAA’s statement, saying it stood by the aircraft, a revamped version of its workhorse single-aisle jet. Airbus competes in this lucrative segment of the market with its family of A320neo models.

“Speculating about the cause of the accident or discussing it without all the necessary facts is not appropriate and could compromise the integrity of the investigation,” Boeing Chief Executive Officer Dennis Muilenburg said in a message to employees. Boeing said late Monday that in the coming weeks it plans to roll out software improvements for the anti-stall function that contributed to the Indonesian disaster.

China was the first aviation market to move on the 737 Max following the crash, with the regulator grounded all 96 of China’s 737 Max planes early Monday until their safety can be assured. But the moves by Singapore and Australia go a step further than those of China and Indonesia, where domestic Max 737 fleets were grounded but the planes not barred from the countries’ airspace.

Singapore’s suspension includes both the Max 8 and 9 variants and affects foreign carriers that deploy the aircraft for flights into the island-city. The 737 Max is the newest version of Boeing’s most important aircraft type, a narrow-body jet forms the backbone of many global airline fleets.

Airbus was first to introduce an upgraded variant of the A320 family with new engines that are more fuel efficient, and the model became a huge commercial hit for the Toulouse, France-based company, prompting Boeing to follow suit with a revamped 737.

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