737 Max ban in US comes late

By Tu Lei Source:Global Times Published: 2019/3/14 22:18:40

Delayed move raises doubts about global aviation leadership

A Southwest Airlines check-in counter receives passengers of a Boeing 737 Max-8 at Baltimore Washington International Airport on Wednesday. American pilots reported issues with the plane late last year. At least four pilots complained following the October crash of a Lion Air flight in Indonesia shortly after takeoff. Photo: AFP

In the face of mounting global pressure and widespread outrage domestically, US authorities on Wednesday local time  gave in and followed dozens of other countries to ground the embattled Boeing 737 Max. But instead of assuring the public, the delayed move sparked much debate about the US role in global aviation as China took the lead. 

Although some Americans praised the government's decision to take safety first, they also feel disappointed as it is China, not the US, which was the first country to ground the 737 Max.  

A tweet, "A good decision, President Trump. Safety must come first," was liked by more than 1,000 after the tweet of President Donald Trump announcing the ban on television.

"You mean after every country in the world banned them. We used to be first, now we're late," netizen Vcc said. 

"Finally Trump manages to catch up with China, the EU, Australia and most other countries in the world on safety to ground the Boeing 737 Max 8," Hardy World said on Twitter. 

Growing frustration among Americans sparked outrage in media reports as well. 

When China on Monday became the first country to order all Boeing 737 Max 8 planes grounded in the aftermath of an Ethiopian Airlines crash Sunday, its aviation regulator sent an unmistakable signal: The US Federal Aviation Administration is no longer the only authority in the civil aviation worldwide, The Washington Post said Tuesday. 

The New York Times said in an article on Wednesday that "that is a big shift from a generation ago, when Chinese regulators largely followed the Federal Aviation Administration's lead. Today, Chinese airlines are among the safest in the world, according to industry statistics." 

Bloomberg said in a report on Wednesday that "the second fatal crash of a Boeing 737 Max aircraft in less than five months is creating a new hierarchy in aviation safety. Thrusting to the top: China."

"China as the first country to stop flying the 737 Max shows our regulator has taken safety as the bottom line," Lin Zhijie, a market watcher told the Global Times on Thursday. 

"Safety is the top priority of all in aviation and learning from the accident investigation process plays a vital role in guiding all stakeholders toward actions to reduce the likelihood of a recurrence," Alexandre de Juniac, director general and CEO of The International Air Transport Association, told the Global Times on Thursday.

As of the end of February, aviation transportation has realized a safe flight for 102 months and 70.4 million hours, the Civil Aviation Administration of China said in a press conference on Thursday. 

Boeing's loss 

Slumping Boeing shares could be read as a sign of market sentiment. 

Boeing's share price dropped 0.5 percent in Thursday morning trading. The Chicago-based company sank 6.15 percent on Tuesday after losing 5.3 percent on Monday, wiping out $26 billion in market value. 

But analysts at Jefferies Investment Bank estimated that the worst-case scenario - a software problem causing a full grounding and a halt to deliveries of the 737 Max 8 - could cost Boeing about $5.1 billion, or 5 percent of the company's annual revenue, within two months,  The Washington Post reported. 

Boeing recorded revenues of $101.1 billion in 2018, according to its fiscal report. The report shows that as of January 31, Boeing received a total of 5,012 737 Max orders, accounting for one-third of its total orders for different models.

However, the further threat not only lies in the stock market but the company itself.

Boeing's credit profile was not immediately affected by the two crashes, but the Boeing 737 Max could be a concern throughout the aviation credit sector for much of 2019, said a report released by Fitch Ratings on Wednesday. 

The report said most concerning would be a harsh scenario including a systemic issue with the aircraft leading to lengthy groundings, material delivery delays, significant order cancellations and negative public sentiment toward the Max.

"If it is confirmed that technical reasons caused the disaster, it is likely to be an unprecedented issue in the history of Boeing," said Wang Yanan, chief editor of Aerospace Knowledge magazine. 

He said Boeing has encountered many difficulties in the past, such as the new model not being accepted by the market, but there have been few cases where the entire model has suffered a serious setback over technical reasons.

Rival's chance

President Xi Jinping will discuss a major order of Airbus SE planes with his French counterpart, Emmanuel Macron, when the Chinese president visits Paris this month, a French official said Thursday, Bloomberg reported. The official said there are "positive signs" regarding the contract.

Indonesia's Lion Air plans to drop a $22 billion order for Boeing 737 Max jetliners and switch to rival aircraft from Airbus SE, Bloomberg reported.

Toulouse-based Airbus is Boeing's biggest rival, and the two giants have dominated the sky for decades. Boeing's 737 family and Airbus' A320 family are both single-aisle aircraft, the fiercest market among the models. 

In 2010, Airbus launched the A320 neo (new engine option), considered more fuel-efficient, and received 1,200 orders at the end of August the following year, and also broke Boeing's monopoly in US skies. 

In response, Boeing introduced the 737 Max series, and Boeing said it is the best selling model in its history.

Boeing predicted that China will need 7,690 new aircraft by 2037 worth $1.2 trillion, of which the demand for single-aisle aircraft is 5,730, accounting for 75 percent of the total demand for new aircraft.

Some analysts believe that this may be an opportunity for China's C919, the single-aisle plane to break the monopoly of Boeing and Airbus. 

The C919 has 815 orders from 28 customers, and three C919 aircraft made a maiden flight after coming off the assembly line in 2015, according to the website of the Commercial Aircraft Corporation of China. 

"The C919 project is still in the first stage, and it is inevitable to encounter difficulties, but we should first guarantee it is a qualified plane and ensure it is safe after taking off, then make it profitable after a technology upgrade," Wang said.

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