US outlier as huge question mark hangs over the Boeing 737 Max

LONDON — Roughly two-thirds of the world, including South Africa have grounded the Boeing 737 Max as airlines see a connection between the crash of an Ethiopian Airlines jet that killed 157 people and a similar disaster involving the same plane last October in which 189 people were killed when a Lion Air flight crashed into the Java Sea in Indonesia. Yet, America's Federal Aviation Administration decided not to take action and said it had no basis to order the grounding of the aircraft. This is despite pressure from several senior politicians in the US and two unions representing flight attendants calling for it. The New York Times says there is a very cosy relationship between Boeing and the FAA, and Boeing could even choose its own employees to sit on the authority and help to certify planes. President Donald Trump initially tweeted that he thought aeroplanes were becoming far too complex to fly, "Pilots are no longer needed, but rather computer scientists from MIT", he tweeted after the Ethiopian crash. He has a very close relationship with Boeing and the FAA decision on standing by the safety of the Boeing 737 Max came after a telephone conversation between President Trump and Boeing Chief Dennis Muilenburg. This raises the question whether Boeing's influence at the FAA is the reason for the United States' decision to keep the Boeing 737 Max in the air raising serious safety concerns for passengers who are likely to choose not to fly on the jet. Bloomberg's Jim Alice explains to Carol Massar how important the Boeing 737 Max is to Boeing's profitability… – Linda van Tilburg

This is always the nightmare for any airframe manufacturer. It's not just for the airlines themselves, but also for the company that's made the plane and it's always the boo ha that we get whenever we have a tragedy. However, this has been made worse simply because this is the second time this has happened on the same model within five months and the 737 MAX is a very important plane for Boeing. The current plan is to get this up to the production cycle to make about $30bn in sales per year spreading after this year. So, it is the most successful jet in history. It is also the biggest selling jet at Boeing. This is a narrow body jet. The 737 has been around for a long time, but the MAX version is a very fuel-efficient version that airlines are crazy about having right now.

They want it because you can put more people into the plane and get about 15% better fuel economy. You put that together and all of a sudden people who thought they couldn't operate a route because they were a low fare carrier or because they just needed some way to compete against low fare carriers, they run to this. So you've seen people like Lion Air in Asia, people such as Spice Jet in India, here in the US Southwest is making a really big bet on this plane, Air Canada. I mean this is a truly global success story that all of a sudden has a cloud hanging over it and so that's one reason that investors have been very spooked by this. They're saying if this plane which is right now the big future of Boeing can't make it or might have to be grounded for a while, who knows what that means for the profitability for the company long-term.

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