U.S. Follows the World to Ground Boeing Max, Citing New Evidence
The move is a major blow to Boeing, which has lost billions of dollars in value this week.
(Bloomberg) -- U.S. regulators reversed course Wednesday and grounded Boeing Co.’s top-selling 737 Max family of airliners after evidence emerged showing a flight that crashed Sunday in Ethiopia may have experienced the same problem as a plane that went down five months ago off Indonesia.
Satellite flight-tracking data, combined with newly discovered evidence from the recent accident, raised suspicions about a safety feature on the Max that was implicated in the Lion Air crash in October, Daniel Elwell, acting administrator of the Federal Aviation Administration, said in a briefing.
“It became clear -- to all parties, actually -- that the track of the Ethiopian Airlines flight was very close and behaved very similarly to the Lion Air flight,” Elwell said.
The move is a major blow to Boeing, which has lost billions of dollars in value this week as nation after nation announced they were barring the aircraft from flying. The single-aisle Max family is the Chicago-based planemaker’s largest seller and accounts for almost one-third of the company’s operating profit.
Boeing dropped as much as 3.2 percent after President Donald Trump announced the grounding but recovered the day’s loss and ended up 0.51 percent by the market close in New York.
Affected planes will be grounded immediately upon reaching their destinations. The impact on U.S. travelers should be limited because there are only 72 Boeing 737 Max aircraft at three U.S. carriers: American Airlines Group Inc. Southwest Airlines Co. and United Continental Holdings Inc. That’s only about 3 percent of the mainline fleet at those carriers.
More than 40 nations had announced the grounding of the jet -- and in some cases a ban on flyovers of the plane -- in recent days despite reassurances from the FAA. The agency had said as recently as Tuesday there was no evidence to justify an action against the Max.
“We were resolute in our position that we would not take action until we had data to support taking action,” Elwell said. “That data coalesced today and we made the call.”
The voice and data recorders from the crashed plane have been flown to Paris for investigation, Ethiopian Airlines said in a tweet late Wednesday. Ethiopian authorities had asked France’s air-safety bureau to help analyze the devices.
The Lion Air flight descended and climbed more than two dozen times as pilots fought against the plane’s automated safety system that was trying to push down the nose. While Elwell didn’t provide precise information about the Ethiopian plane’s path, it was apparently making the same highly unusual and distinctive movements.
In addition, some unspecified piece of evidence was discovered by investigators in Ethiopia, he said. “Suffice it to say that the evidence we found on the ground," Elwell said, “made it even more likely that the flight path was close, very close to Lion Air’s.”
The FAA has set no timetable for a resumption of Max flights. Elwell said he hoped the manufacturer, working with carriers and regulators such as FAA, would make it as short as possible.
“The grounding will remain in effect pending further investigation, including examination of information from the aircraft’s flight data recorders and cockpit voice recorders,” the agency said in a statement.
He cautioned that there still is no direct link between the two crashes. “We still have a lot to learn before we can say that they were the same cause and effect,’’ he said.
Boeing issued a statement saying it still has “full confidence” in the plane.
“We are supporting this proactive step out of an abundance of caution,” Boeing Chief Executive Dennis Muilenburg said in a statement. “We are doing everything we can to understand the cause of the accidents in partnership with the investigators, deploy safety enhancements and help ensure this does not happen again.”
The U.S. action followed Canada’s decision to halt Max flights earlier Wednesday. Canada Transport Minister Marc Garneau said in Ottawa that satellites tracked the Ethiopian Airlines flight and suggest possible “similarities” with a Lion Air crash on Oct 29. A Lion Air Max 8 crashed off the coast of Indonesia, killing all 189 people aboard, following a malfunction of a software feature on the plane that repeatedly forced it into a dive.
The FAA and other aviation regulators around the world took several steps after the Indonesia crash to notify pilots of the Maneuvering Characteristics Augmentation System, or MCAS, and to remind them how to overcome it in the event of a malfunction. However, a more formal fix to redesign it won’t be mandated until April, the FAA said Monday.
All 157 people aboard the Ethiopian Airlines 737 Max 8 died when it plunged into the ground at high speed about six minutes after takeoff near Addis Ababa. Investigators have released no information about what caused the crash.
Trump told reporters that he had spoken with Transportation Secretary Elaine Chao, the FAA’s Elwell and Muilenburg before making the call to ground 737 Max 8 and Max 9 model planes in the U.S.
“Any plane currently in the air will go to its destination and thereafter be grounded until further notice,” Trump said. “So planes that are in the air will be grounded -- if they are the 737 Max, will be grounded upon landing at the destination.”
“Boeing is an incredible company. They are working very, very hard right now, and hopefully they will very quickly come up with the answer but until they do the planes are grounded,” Trump said.
Southwest has 34 Max 8 aircraft among its more than 750 planes. In contrast, its fleet includes more than 500 of the older 737-700 model. The Dallas-based airline and United fly the Max across their route networks.
A significant impact will be felt in Miami, where American has concentrated its initial Max deliveries for service to the Caribbean and to New York’s LaGuardia airport. The carrier has 24 Max 8 jets in its fleet of more than 1,550 planes.
The last fleet-wide grounding by the FAA occurred on Jan. 17, 2013, when it ordered a halt to revenue flights by Boeing’s then-new model, the mostly composite 787, after a lithium-ion batteries on the plane overheated. Prior to that, the last such action halting flights on a fleet occurred in 1979 on the Douglas DC-10.
--With assistance from Mary Schlangenstein and Justin Bachman.
To contact the reporters on this story: Alan Levin in Washington at alevin24@bloomberg.net;Jennifer Epstein in Washington at jepstein32@bloomberg.net
To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, ;Brendan Case at bcase4@bloomberg.net, Wendy Benjaminson
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