One year after Lion Air crash, Boeing 737 MAX remains grounded

The crisis has cost Boeing billions of dollars and spawned numerous investigations by US authorities, as well as lawsuits from victims’ families. (AFP)
Updated 30 October 2019

One year after Lion Air crash, Boeing 737 MAX remains grounded

  • The situation plunges the 103-year-old aerospace giant into the biggest crisis of its history

NEW YORK: On March 12, 2019, Dennis Muilenburg phoned US President Donald Trump for support after European and Chinese regulators grounded the Boeing 737 MAX following an Ethiopian Airlines crash that killed 157 people.

When Muilenburg hung up, the Boeing chief executive thought he had the backing of the US leader. But the next day, Trump announced that Boeing’s top-selling plane was “grounded effective immediately.”

Boeing’s entire global fleet of almost 400 MAX planes has stayed out of service ever since, plunging the 103-year-old aerospace giant into the biggest crisis of its history.

The situation has raised questions about Boeing’s commitment to safety and corporate culture while also tarnishing the company’s image as it continues to compete with archrival Airbus.

The crisis has cost Boeing billions of dollars and spawned numerous investigations by US authorities, as well as lawsuits from victims’ families.

The crisis actually began months earlier on October 29, 2018, when a MAX operated by Indonesian carrier Lion Air plunged into the Java Sea.

“Boeing blamed the pilots immediately in Lion Air, and then bungled the response thereafter,” said Scott Hamilton of Leeham News, an aviation publication.

“Boeing’s stubborn resistance to admit its mistakes — even as those mistakes have delayed the return to operation of 737 MAX planes — are turning this into a disaster for the company and its customers,” said Jim Hall, former chairman of the US National Transportation Safety Board (NTSB).

Indonesian investigators last week attributed the crash to nine factors, including inadequate pilot training and a poorly designed flight handling system known as the Maneuvering Characteristics Augmentation System (MCAS) that it said wasn’t properly certified by US regulators.

“These items were connected to each other. If one of them was not occurring on that day, the accident may not have happened,” said Nurcahyo Utomo, an investigator with Indonesia’s National Transportation Safety Committee.

If the investigation showed Lion Air’s pilots to be young and untested, it also revealed them to be in the dark about the MCAS, which was not mentioned in Boeing’s flight manual.

The system has also been implicated in the Ethiopian Airlines crash.

The MCAS was developed specifically for the MAX to guard against stalling that could be caused by the plane’s heavier engines.

The system was activated shortly after takeoff in both flights based on an incorrect sensor reading. The error stemmed from an angle of attack sensor that was approved for service by Xtra Aerospace, a Florida company that had its repair station certificate revoked by the FAA last week.

The pilots in two crashes were unable to regain control of the plane from MCAS, in part because the system was designed with no redundancy to that single sensor.

A report last month from the NTSB said Boeing and the FAA misjudged how pilots would respond to multiple alerts and alarms as they encountered trouble when flying the 737 MAX.

Another report earlier this month from a panel of global regulators concluded the FAA lacked the manpower and expertise to evaluate the MCAS.

A few days after the Lion Air crash, the FAA sent a directive to MAX operators about the risk of a faulty angle of attack sensor while Boeing developed an upgrade to the MCAS.

However, Boeing was still working on the correction at the time of the Ethiopian Airlines crash five months later.

$8bn blow to Erdogan as investors flee Turkey

Updated 2 min ago

$8bn blow to Erdogan as investors flee Turkey

  • Overseas holdings in Istanbul stock exchange are at lowest in 16 years

ANKARA: Foreign capital is flooding out of Turkey in a massive vote of no confidence in President Recep Tayyip Erdogan’s economic competence.
Overseas investors have withdrawn nearly $8 billion from Turkish stocks since January, according to Central Bank statistics, reducing foreign investment in the Istanbul stock exchange from $32.3 billion to $24.4 billion.
As recently as 2013, the figure was $82 billion, and foreign investors now own less than 50 percent of stocks for the first time in 16 years.
“Foreign investment has left Turkey for several reasons, both internal and external,” Win Thin, global head of currency strategy at Brown Brothers Harriman, told Arab News.
“Externally, investors fled riskier assets like emerging markets during the height of the coronavirus pandemic. Some of those flows are returning, but investors are being much more discerning and Turkey does not seem so attractive.”
In terms of internal factors, Thin said that Turkish policymakers had made it hard for foreign investors to transact in Turkey. “This includes real money clients, not just speculative.
“By implementing ad hoc measures to try and limit speculative activity, Turkey has made it hard for real money as well. Besides these problems, Turkey’s fundamentals remain poor compared to much of the emerging markets.”
Erdogan allies claim international players are manipulating the Istanbul stock exchange through automated trading, and have demanded action to make it difficult for them to trade in Turkish assets.
Goldman Sachs, JPMorgan, Merrill Lynch, Barclays and Credit Suisse were banned this month from short-selling stocks for up to three months, and this year local lenders were briefly banned by the banking regulator from trading in Turkish lira with Citigroup, BNP Paribas and UBS
JPMorgan was investigated by Turkish authorities last year after the bank published a report that advised its clients to short sell the Turkish lira.
MSCI, the provider of research-based indexes and analytics, warned last month that it may relegate Turkey from emerging market status to frontier-market status because of bans on short selling and stock lending.
With the market becoming less transparent, overseas fund managers, especially with short-term portfolios, are unenthusiastic about the Turkish market and are becoming more concerned about any forthcoming introduction of other liquidity restrictions.
The exodus of foreign capital is likely to undermine Turkey’s drive for economic growth, especially during the coronavirus pandemic when employment and investment levels have gone down, with the Turkish lira facing serious volatility.