Boeing in crisis as second 737 crash in months grounds flights

Bloomberg

Boeing Co. Chief Executive Officer Dennis Muilenburg faces his biggest crisis yet following the second deadly crash of a 737 Max jetliner, prompting some airlines to ground the best-selling plane and sending the shares on track for their biggest loss since just after the 9/11 attacks.
China ordered its carriers to ground all 96 of Boeing’s newest 737 model, while Indonesia said it would also halt flights after Ethiopian Airlines Flight 302 went down in a field shortly after takeoff, killing all 157 people on board. While the flight recorders have now been recovered and must be analysed, the disaster bore similarities to the doomed Lion Air 737 Max that crashed in October.
The 737 Max is Boeing’s most important aircraft type, generating almost one-third of the company’s operating profit and forming the backbone of many global airline fleets who use the model and Airbus’s competing A320 family on shorter routes.
Boeing sank 12 percent to $371.89 in early US trading. That would put the stock on track for its biggest drop since September 2001, and pose a threat to the rally under Muilenburg, who’s overseen a tripling in the shares since taking over at at the biggest US exporter.
“Boeing has lost control of the timetable to provide the safe, reliable solution,” said Neil Hansford, chairman of the Australian consultancy firm Strategic Aviation Solutions. “The longer it goes, the more chance Boeing has of losing orders.”
The grounding in China, followed by the Indonesian air safety regulator’s order to halt 737 Max flights from Tuesday, raises the specter of other countries following suit. South Korea began a special inspection of the aircraft, while in Europe, regulators said they’re in contact with their US counterparts as well as Boeing, but that it’s too soon to take action.
US carriers such as Southwest Airlines Co., American Airlines Group Inc. and United Continental Holdings Inc. are still flying the 737 Max.
Investigators have recovered the cockpit voice and flight-data recorders, Ethiopian Airlines said on Monday, a significant step forward in piecing together what happened.
Chinese airlines accounted for about 20 percent of 737 Max deliveries worldwide through January, and further purchases of the Chicago-based planemaker’s aircraft are said to have been touted as a possible component of a trade deal with the US
China Southern Airlines Co. has 16 of the aircraft, with another 34 on order, according to data through January on Boeing’s website. China Eastern Airlines Corp. has 13, while Air China Ltd. has 14, Boeing says. Other Chinese airlines that have bought the Max include Hainan Airlines Holdings Co. and Shandong Airlines Co., the data show.
Lion Air, which is based in Indonesia, is one of the biggest customers, having ordered 201 Max planes and taken
delivery of 14.
The single-aisle 737 Max is poised to generate about $30 billion in annual revenue as factory output rises to a 57-jet monthly pace this year, according to Bloomberg Intelligence estimates.
The disaster in Ethiopia followed the crash of Lion Air’s 737 Max off the coast of Indonesia on October 29. A preliminary report into that flight indicated that pilots struggled to maintain control following an equipment malfunction. The US Federal Aviation Administration is working with Boeing on a possible software change to reduce the chances that such a failure could cause an accident in the future.
Boeing responded to the earlier crash by advising pilots that the Max’s so-called angle-of-attack sensor can provide false readings, causing the plane’s computers to erroneously detect a mid-fligh.