A Second Fatal 737 Crash Rattles Boeing

Wikipedia (LLBG Spotter)

Sunday’s fatal crash of a second Boeing Co. (NYSE: BA) 737 MAX 8 (737-8) near Addis Ababa, Ethiopia, killed all 157 passengers and crew on board just four months after a similar aircraft crashed in Indonesia killing all 189 people on board Lion Air’s flight JT 610. Whether or not the causes for the crashes are the same, it is rare for two events like this to occur with such a new airplane.

The 737-8 entered service in May of 2017, and Boeing has delivered more than 350 of the planes since then. Ethiopian Airlines had taken delivery of seven of the new planes and has another 23 on order. The airline has grounded its six remaining 737-8s as an “extra safety precaution,” according to a report in the Seattle Times.

The Civil Aviation Administration of China (CAAC) has also grounded all 96 Boeing 737-8s currently in service by the country’s airlines. Chinese carriers buy about a third of all 737s that Boeing manufactures.

Reuters has reported that a U.S. official said there are no plans to follow China’s lead and ground all 737-8s in U.S. carriers’ fleets. The official also noted that it is “unclear” why Chinese authorities grounded the planes because the investigation into Sunday’s crash had barely begun.

There is widespread speculation that the cause of Sunday’s crash may be related to the faulty sensor problem that a preliminary investigation of the Lion Air crash uncovered in November. Boeing issued a bulletin to operators of the 737s directing them to procedures in the aircraft’s flight manual on how to handle erroneous input from the sensor.

That is just one possibility that investigators will be examining. There are literally dozens of others, including mechanical failure, weather conditions, human error, terrorist attack and maintenance history.

In a statement issued Sunday, Boeing said:

Boeing is deeply saddened to learn of the passing of the passengers and crew on Ethiopian Airlines Flight 302, a 737 MAX 8 airplane. We extend our heartfelt sympathies to the families and loved ones of the passengers and crew on board and stand ready to support the Ethiopian Airlines team. A Boeing technical team will be travelling to the crash site to provide technical assistance under the direction of the Ethiopia Accident Investigation Bureau and U.S. National Transportation Safety Board.

John Cox, founder and chief executive of Safety Operating Systems, an aviation safety consultancy, told the Seattle Times:

We don’t know anything yet. We don’t have close to sufficient information to consider grounding the planes. That would create economic pressure on a number of the airlines that’s unjustified at this point. We have to be patient and let the investigators do their job. They know the urgency.

The 737-8 is the best-selling aircraft in Boeing’s 737 MAX family. Later this year, the company plans to raise production of the plane to 57 a month to work down a backlog of more than 4,600 orders.

Boeing stock was pummeled in Monday’s premarket trading session. Shares were down about 9.5%, at $382.44, in a 52-week range of $292.47 to $446.01. The 12-month consensus price target on the stock is $443.75.

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