Ethiopian crash throws spotlight back on Boeing

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 US 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.

Answers needed

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 fulfil 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 $15bn 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.

ZAR/USD
16.81
(-0.26)
ZAR/GBP
21.34
(-0.12)
ZAR/EUR
19.02
(-0.13)
ZAR/AUD
11.73
(-0.21)
ZAR/JPY
0.15
(+0.60)
Gold
1681.70
(+0.13)
Silver
17.39
(+0.17)
Platinum
815.55
(+0.35)
Brent Crude
41.90
(+5.78)
Palladium
1949.00
(+0.59)
All Share
54722.38
(+2.85)
Top 40
50199.80
(+2.79)
Financial 15
11467.53
(+4.66)
Industrial 25
74264.52
(+2.52)
Resource 10
49969.31
(+2.29)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
19% - 210 votes
I am taking a hit, but should be able to recover in the next year
26% - 279 votes
My finances have been devastated
29% - 316 votes
It's still too early to know what the full effect will be
26% - 276 votes
Vote