US aviation body says 737 Max safe to fly, Boeing shares dive

March 12, 2019 07:55
Mourners attend a memorial service for the victims of the Ethiopian Airlines Flight ET 302 plane crash in Addis Ababa on Monday; engine parts are seen at the crash site near the town of Bishoftu. Photo: Reuters

The United States told airlines it was safe to fly 737 MAX 8 planes as investigators found two black box recorders that will help piece together the final moments of an Ethiopian Airlines jet before it plunged to the ground on Sunday.

China and Indonesia have grounded their fleets of 737 MAX 8 aircraft, citing safety concerns, contributing to a drop in Boeing Co. shares that wiped billions of dollars off the market value of the world’s biggest plane maker.

Late on Monday, the US Federal Aviation Administration (FAA) issued a “continued airworthiness notification” to assure operators of the plane that it was safe to fly.

The aviation regulator said it was collecting data on the crash and keeping in contact with international civil aviation authorities. It pledged to take immediate action if it identified any safety issues.

Southwest Airlines Co., which operates the largest fleet of 737 MAX 8s, said it remained confident in the safety of all its Boeing planes even as it received a rush of queries from customers wanting to know if they were booked to fly on a 737 MAX 8.

“Our customer relations team is responding to these customers individually, emphasizing our friendly, no-change fee policy,” the No. 4 US airline said in a statement.

Investigators in Ethiopia found two black box recorders early on Monday that will help piece together the final moments of the plane before it plunged, trailing smoke and debris, and crashed killing 157 people. The disaster came just months after a jet of the same model came down in Indonesia killing 189 people.

The discovery of black box recorders means the cause of the crash may be quickly understood, as long as recordings are not damaged, although it typically takes a year for a full detailed investigation to be completed.

Boeing chief executive Dennis Muilenburg said he was confident in the safety of the 737 MAX in an email to employees which was seen by Reuters.

“We are confident in the safety of the 737 MAX and in the work of the men and women who design and build it,” Muilenburg said. “Since its certification and entry into service, the MAX family has completed hundreds of thousands of flights safely.”

Muilenburg said Sunday’s crash was “especially challenging” coming only months after the loss of Lion Air Flight 610.

Boeing has delivered more than 370 MAX Airplanes to 47 customers, Muilenburg said.

Insurance claims

The planemaker, the airline and its insurers face big claims after the crash, industry sources said. The insured value of the plane itself was likely around US$50 million.

On top of that, Boeing may face lawsuits from victims’ families in the United States, where legal compensation payments for people killed in plane crashes could run around US$2 million to US$3 million per person, depending on the law applied, compared to about US$200,000 in Ethiopia, according to Justin Green, a New York-based aviation lawyer who has represented families in cases against Boeing.

Boeing declined to comment on its insurance cover.

The company’s share price briefly had its biggest one-day drop since the attacks of Sept. 11, 2001, falling as much as 13.5 percent early on Monday on fears that two crashes in such a short time could reveal flaws in the new plane.

Some investors saw that dip as an opportunity to buy Boeing shares, which have tripled in value over the past three years, sparking a recovery. The shares closed down 5.3 percent at US$400.01. They hit a record high of US$446 last week.

‘Smoke and sparks’

The Ethiopian Airlines 737 MAX 8 plunged into farmland minutes after take-off from Addis Ababa for Nairobi on Sunday.

“The plane was very close to the ground and it made a turn. We looked and saw papers falling off the plane,” Malka Galato, the farmer whose land the plane crashed on, told Reuters.

“Cows that were grazing in the fields ran in panic ... There was smoke and sparks coming from the back of the plane.”

The plane tried to climb but failed, then swerved sharply trailing white smoke and objects including clothes before crashing, said farmer Tamirat Abera.

The victims came from more than 30 countries, and the United Nations said they included 21 members of its staff. The UN had earlier said 22 of its staff were on board.

The 737 line, which has flown for more than 50 years, is the world’s best-selling modern passenger aircraft and viewed as one of the industry’s most reliable.

The new MAX 8 variant, with bigger engines designed to use less fuel, entered service in 2017. By the end of January this year, Boeing had delivered 350 of the new jets to customers, with another 4,661 on order, and they could become the workhorses for airlines around the globe for decades.

Various worried nations took swift action after the crash.

Safety standard

Ethiopian Airlines, which has four other 737 MAX 8 jets, said it was grounding them as a precaution. China also ordered its airlines to suspend their 737 MAX 8 jets.

Noting that the accidents involving newly delivered planes had both taken place shortly after take-off, the Civil Aviation Administration of China (CAAC) said it would notify airlines when they could resume flying the jets, after contacting Boeing and the FAA.

China has been asserting its independence as a safety regulator as it negotiates mutual safety standard recognition with regulators in the United States and Europe, Western industry sources say.

The crash may scupper a potential commitment by China to buy more Boeing-made aircraft as part of a deal being negotiated to end a months-long trade war between China and the US.

Indonesia, where a Lion Air 737 MAX 8 went down in October, said it would temporarily ground the model for inspection.

Ethiopian Airlines said its pilot Yared Getachew, a dual Ethiopian-Kenyan national, had a “commendable record” and more than 8,000 hours of flying experience.

The airplane, received in November 2018, had flown more than 1,200 hours, and it had returned from Johannesburg earlier on Sunday, chief executive Tewolde GebreMariam said.

The flight had unstable vertical speed after take-off, the flight tracking website Flightradar24 tweeted. The Sweden-based service said the jet climbed almost 1,000 feet (305 meters) after taking off from Addis Ababa, a hot and high-altitude airport whose thinner air requires extra effort from an aircraft’s engines.

It dipped about 450 feet before rapidly climbing another 900 feet until the point where satellite tracking data was lost. Reuters

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