Airlines rethink 737 Max orders after crashes

Airlines rethink 737 Max orders after crashes
Picture: Heikki Saukkomaa/Lehtikuva via AP)

By Bella Genga, Layan Odeh, and Pádraig Hoare

Norwegian Air International, which flies Boeing’s 737 Max to the US east coast from Irish airports, has no plans to abandon orders of the aircraft, even as the Ethiopian Airlines crash looks increasingly likely to hit the planemaker’s $55bn (€49bn) global order book. VietJet Aviation, which doubled its order to 200 of the aircraft, priced at about $25bn, only last month, said it will decide on its future plans once the cause of the tragedy has been found, while Kenya Airways could switch to Airbus rival, A320.

That’s as Indonesia’s Lion Air firms up moves to drop a $22bn order for the 737, in favour of the Airbus jet, according to sources, while a $5.9bn order by Saudi carrier Flyadeal hangs in the balance. Boeing, whose shares have lost 12% of their value this week, faces escalating financial risk, after two disasters in the past five months involving its newest narrow-body jet.

Norwegian has 18 of the aircraft in its fleet, with more than 100 on order. A spokesman for the airline said orders for the 737 Max would be maintained. The airline flies to the US east coast from Cork, Dublin, and Shannon. Its flight to Providence, Rhode Island, an hour from Boston, was the first-ever direct transatlantic flight from Cork, when it took off in July 2017. It has suspended use of the 737 Max, as investigations intensify into the cause of the Ethiopian Airlines crash.

Norwegian, the biggest European operator of the 737 Max, said it will ask Boeing to cover the costs of the plane’s grounding. “It is obvious that the costs incurred by the temporary grounding of brand-new aircraft should be covered by those who have made the airplane. We have not made any cost calculations at this time, as our main priority is to ensure that affected passengers are being taken care of in the best possible way,” the firm said. Ryanair is due to take charge of its first 737 Max next month, and will take another 50 before the summer of 2020.

Sunday’s loss of an Ethiopian Airlines 737, in which 157 people died, bore similarities to a Lion Air 737 Max crash on October 29. The latter plunged into the Java Sea, off Indonesia, just minutes after take-off. Lion Air’s relations with Boeing soured after the manufacturer pointed to maintenance issues and human error as the underlying cause, even though the flights’s pilots had been battling a computerised system that took control following a sensor malfunction.

The 737, which first entered service in the late 1960s, is the aviation industry’s best-selling model and Boeing’s top earner. The re-engined Max version has racked up more than 5,000 orders, worth in excess of $600bn. Boeing is in crisis, as airlines around the world ground the plane, with regulators from Australia to Europe denying it access to their airspace. The Irish Aviation Authority ordered 737 Max aircraft grounded on Tuesday. In a dramatic development, the European Aviation Safety Agency has split with the US Federal Aviation Administration (FAA) in banning the Max, leaving the US regulator isolated in insisting that it’s still safe to fly.

Picture:  EPA/STRINGER
Picture: EPA/STRINGER

In grounding the 737 Max, centuries-old American allies, including the UK and Australia, broke convention by snubbing the FAA, an authority that has defined what’s airworthy — and what’s not — for decades. Yesterday, New Zealand, the United Arab Emirates, and Vietnam became the latest countries to block the 737 Max, legitimising China’s early verdict, on March 11, that the plane could be unsafe. VietJet will decide whether to go ahead with its purchase following “official conclusions” from global regulators and the Civil Aviation Authority of Vietnam, it said.

In December, Saudi carrier Flyadeal said it would switch from Airbus and purchase up to 50 737 Max jets, subject to final terms being reached. The carrier, a unit of Saudi Arabian Airlines, said it’s waiting on the results of the investigation. “We’re closely monitoring the situation and are in constant contact with Boeing. There are no conclusions to be drawn at this time,” it said. Lion Air was looking at scrapping its Boeing deal after October’s crash, which killed 189, and the African disaster has made co-founder, Rusdi Kirana, more determined to cancel the contract.

Kenya Airways will consider switching to Airbus or could opt to take more of the older 737-800 version of the Boeing jet, which doesn’t feature the suspect system, chairman Michael Joseph said, without ruling out sticking with the Max. Last year, the company revived plans to expand its network with a proposal to buy as many as 10 of the planes, worth about $1.2bn. Some 32 of those killed in the Ethiopian crash, six minutes after the plane took off from Addis Ababa for Nairobi, were Kenyan citizens, the most for any single country.

Mr Joseph said:

We will carefully follow the developments around the 737 Max. No decision has been taken yet

Sub-Saharan Africa’s third-largest carrier is almost 50% state-owned, after a reorganisation in 2017, with long-time investor, Air France-KLM Group, shrinking its holding to less than 10%. Kenya Airways has about 40 aircraft, including eight 787 wide-bodies and the same number of 737-800s. The Dreamliner fleet will likely expand to add long-haul services, Mr Joseph said, requiring more smaller planes to feed them with customers.

Those might include turboprops and Airbus A220 or Embraer SA E2 regional jets, as well as 737-sized models. Canadian transport minister, Marc Garneau, told lawmakers he won’t hesitate to take action on Boeing, if needed, but said it’s too early to determine the cause of the Ethiopian Airlines crash. FAA acting chief, Daniel Elwell, said the agency continues to closely monitor an investigation into the fatal crash in Ethiopia and will take action, if necessary. No other civil aviation authorities have given the FAA data that would warrant action, the agency said. Bloomberg and Irish Examiner

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