Wed, Mar 13, 2019 page10

• Boeing attempts to contain crisis

  INSUFFICIENT TRAINING: Recent crashes likely revealed a lack of training on how to use a new stall prevention system, rather than a design flaw in the 737 Max, an analyst said

  • Bloomberg
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  Boeing Co and US regulators on Monday grappled with a crisis of confidence in the 737 Max that moved with the speed of an Internet rumor after the second deadly crash of the model in five months.

  Boeing tumbled the most on the S&P 500 Index as questions swirled around the newest version of its 737 family, a cash cow that generates almost one-third of the company’s operating profit.

  “Boeing has lost control of the timetable to provide the safe, reliable solution,” said Neil Hansford, chairman of Australian consultancy Strategic Aviation Solutions. “The longer it goes, the more chance Boeing has of losing orders.”

  

  A worker stands near a Boeing 737 Max 8 parked at the company’s assembly plant on Monday in Renton, Washington.

  Photo: AP

  Boeing shares sank 6.1 percent to US$396.62 at 3:21pm in New York after paring losses earlier in the session of as much as 13 percent.

  It was the biggest intraday decline since Sept. 17, 2001, the first day of trading after the Sept. 11, 2001 attacks.

  The US has only grounded an entire model of aircraft twice in the past 40 years. The most recent time was in January 2013 after two lithium-ion battery fires on Boeing’s 787 Dreamliner model. It only acted after the second such incident occurred.

  Boeing has dispatched a technical team to assist the investigation into the Ethiopian Airlines plane, which was delivered new in November last year to Africa’s biggest carrier.

  The US Federal Aviation Administration (FAA), which originally certified the 737 Max, and the US National Transportation Safety Board have also joined the probe.

  The cloud around the Max is emerging as the biggest crisis for Boeing CEO Dennis Muilenburg, 55, who was running company’s defense business during the Dreamliner’s grounding.

  Since he took the reins in July 2015, Boeing has dramatically expanded cash flow, repurchased shares and built a US$490 billion backlog of unfilled orders. The shares have tripled, boosting the company’s market value by US$140 billion and making Boeing the most valuable US industrial company. Sales last year surpassed US$100 billion for the first time.

  However, since the Lion Air crash, Boeing has been hit by concerns about the 737 Max, even though its shares have rallied.

  The company and the FAA have been finalizing a software fix for an obscure anti-stall measure created for the plane that came to light with the Indonesia tragedy.

  The “maneuvering characteristics augmentation system,” triggered by an erroneous sensor reading, had baffled pilots by pushing the Lion Air plane downward dozens of times before it crashed.

  The flight-control software is activated without pilot input when a sensor measuring the angle that a plane’s nose is flying relative to the wind indicates the aircraft might be approaching a mid-flight stall.

  However, the software only operates when a plane is being flown manually with its flaps retracted, according to a memo provided to Southwest Airlines pilots dated on Nov. 10 last year following the Lion Air crash.

  Flaps are typically extended to provide lift as airplanes climb after takeoff.

  Boeing responded to the earlier crash by advising pilots that the Max’s so-called angle-of-attack sensor could provide false readings, causing the plane’s computers to erroneously detect a stall.

  That in turn could prompt the aircraft to dive as long as 10 seconds to regain the speed the computer thinks is needs to keep flying.

  Pilots could counteract the sudden downward tilt by flipping two switches and manually holding the aircraft stable, the plane maker said.

  “The crash may show insufficient training for the new stall prevention systems on the 737 Max. It’s unlikely due to design flaws, and the plane is likely to stay in service,” global aviation analyst George Ferguson said.

  The single-aisle 737 forms the backbone of many global airline fleets, which use the model and Airbus SE’s competing A320 line on shorter routes.

  The 737 Max, which debuted in May 2017, is poised to generate about US$30 billion in annual revenue as factory output rises to a 57-jet monthly pace this year, according to Bloomberg Intelligence.

  Airbus is also studying a major production boost of its upgraded A320neo.

  While groundings of the Max probably would not spur mass order cancelations, “this nevertheless spurs worries that the Max is flawed and could lose share to the Neo if customers, pilots and/or passengers sour on the aircraft,” Citigroup Inc analyst Jonathan Raviv said.

  “But at the end of the day, these sorts of issues are usually resolved with the fact that they’re still flying in the US, suggesting this will be the ultimate outcome,” Raviv said in a note to clients.
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