Ethiopian Crash Throws the Spotlight Back on Boeing

Bloomberg, By Chris Bryan

It’s too soon to say what caused Sunday’s disaster or whether it was similar to the Lion Air crash. But passengers and airlines need answers quickly.

These are worrying hours for Boeing Co. – and tragic ones for 157 families. The second crash of a 737 Max jet in five months raises inevitable questions about the safety of the U.S. manufacturer’s flagship single-aisle aircraft, even though it’s still not known what caused the latest disaster. The company must respond with total transparency and hope there was nothing it could have done to have avoided Sunday’s crash in Ethiopia.

We don’t know whether what happened to the Ethiopian Airlines plane was the same thing that brought down a Lion Air jet in October and a rush to judgment helps nobody, including the people who’ve lost their lives and their loved ones.

Superficially, there are similarities: Both jets were almost brand new, both experienced difficulties shortly after takeoff and asked to return to the airport. But the details are absolutely crucial here.

In the wake of the Lion Air crash in Indonesia, it emerged that the 737 Max contains software that forces the plane’s nose down in certain circumstances to prevent it stalling. Some pilots weren’t aware of the safety system and felt they should have been told. The New York Times reported that the manufacturer wanted to keep additional pilot training to a minimum (the 737 Max competes with Airbus SE’s 320neo).

Boeing insisted, however, that all pilots know how to override the plane’s automated systems. In view of the Lion Air disaster, it would be surprising if the Ethiopian Airlines pilot was unaware of this procedure. So it’s quite possible the causes of these two crashes are unrelated.

Until there is clarity about the circumstances of the latest disaster, though, some passengers will naturally be anxious about flying on the aircraft. Airline owners of the 737 Max, which include Southwest Airlines Co. and American Airlines Group Inc., are monitoring the investigation closely. That the two crashes of a new model of aircraft happened so closely together will add to the sense of urgency.

Before any preliminary findings, it’s still too early to speak about the possibility of grounding the fleet. But such a scenario would obviously be a huge reputational blow to Boeing, which delivered more than 250 Max planes last year and is ramping up production to fulfill more than 5,000 orders. The plane is sold out until 2023.

The jet’s sales success is a big reason why Boeing’s shares are close to a record high and analysts expect it to generate about $15 billion of free cash flow this year.

But all of that is secondary to Sunday’s tragedy. Up until now, it was to the credit of Boeing, Airbus and the airlines that passengers could board a commercial aircraft knowing that a crash was incredibly unlikely. While this remains the case, that there’s even a sliver of doubt about a top-selling aircraft type is a shocking development. Passengers and airlines need answers, quickly.

Source Bloomberg