Boeing faces safety questions after second 737 crash in six months


By David Goldman, CNN Business .Updated 4:43 PM ET, Sun March 10, 2019

New York (CNN Business)

Boeing has been the envy of the international business world this year. But now the company is facing new questions after its second deadly crash in less than six months.


All 157 people on board an Ethiopian Airlines flight died after the plane went down shortly after takeoff on Sunday morning. It follows a Lion Air flight that went down in late October, killing all 189 people on board.

Both the Ethiopian Airlines and Lion Air flights were brand-new Boeing 737 MAX 8 planes. And both crashed minutes into flight.

The circumstances of both crashes remain under investigation, and Boeing has presented no evidence to suggest the two incidents are linked. The similarities may be a coincidence.

But if the Ethiopian Airlines crash was caused by the same issue as the Lion Air crash, Boeing(BA) might need to quickly implement a package of modifications to its planes and change the way 737 MAX 8 crew are trained, according to Richard Aboulafia, aviation analyst at Teal Group.

If the manufacturer, airlines or customers grow concerned about the 737 MAX 8’s safety, Boeing might have to temporarily ground the new planes or halt deliveries, Aboulafia said.

The 737 MAX is Boeing’s bestseller by far. The two-year-old 737 MAX 8 model in particular is hugely popular (the MAX 9 only recently went on sale and Boeing has not yet delivered the MAX 10). Last year, 72% of Boeing’s deliveries were 737 planes. Boeing plans to make 59 new 737s each month this year — more than four times the number of 787s, Boeing’s next-best seller.

Southwest has the largest fleet of 737 MAX 8 airplanes, followed by RyanAir and FlyDubai, according to Boeing. American Airlines and United also fly the MAX 8. Delta does not fly any 737 MAX variants.

Although it’s “way too soon to know anything about this crash,” Aboulafia said that is unlikely to hurt Boeing’s bottom line too much.

“Relative to the company’s revenue base, this would not be overly burdensome by any means,” he said.

Boeing said in a statement that it “is deeply saddened to learn of the passing of the passengers and crew on Ethiopian Airlines flight 302, a 737 MAX 8 airplane,” The company said it is prepared to provide technical assistance at the request of the US National Transportation Safety Board.

The Ethiopian plane had flown for only 1,400 hours before it crashed, and Ethiopian Airlines has a good safety record.

October’s Lion Air crash is believed to be caused by faulty data that suggested the nose was tilted higher than it was. The new safety system installed in the 737 MAX 8 plane automatically pulls the plane’s nose down if data suggests it is at risk.

Boeing’s stock is up 31% this year. It’s the best performer in the Dow this year and the 16th best stock in the S&P 500.

Boeing had its best year ever in 2018, and it expects this year to be even better. The company posted sales of more than $100 billion for the first time in its 102-year history because of increases in commercial and military jet deliveries.

The company delivered a record 806 commercial jets last year, up nearly 6% from 2017.





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