China grounds use of Boeing 737 Max planes after Ethiopian Airlines crash
China’s aviation authority issued the directive on Monday 9am, Beijing time, and Chinese airlines will have to suspend their Boeing 787 Max aircraft operations by 6pm.
China has temporarily grounded all Chinese airlines from the use of Boeing Co's 737 Max planes after Ethiopian Airlines flight 302 crashed within minutes from take-off on Sunday, killing all 157 people on board. This is the second same plane model from Boeing that has crashed in six months, raising questions on the safety of the airline company’s new model.
China’s aviation authority issued the directive on Monday 9am, Beijing time, and Chinese airlines will have to suspend their Boeing 787 Max aircraft operations by 6pm. The authorities will issue a further notice as to when the airlines can resume flying the jets after a consultation with the United States Federal Aviation Administration and Boeing.
Ethiopian Airlines flight ET302 had plunged to the ground minutes after leaving Addis Ababa enroute to Nairobi, Kenya on Sunday. The freak accident is the same type of plane that had crashed in Indonesia in October which killed 189 people.
‘The pilot mentioned that he had difficulties and he wanted to return. He was given clearance to turn around,’ Ethiopian Airlines chief executive Tewolde GebreMariam told reporters in a conference in Addis Ababa.
According to reports, the weather conditions were good in the Ethiopian capital the time the plane took off.
Boeing said it was ‘deeply saddened’ by the accident from Ethiopian Airlines, and it will provide a technical team to assist investigators.
Chinese Boeing 737 Max carriers
The grounding of the Boeing 737 Max planes from China could potentially threaten Boeing’s business, as Chinese carriers take up around 20% of 737 Max deliveries globally through January.
According to data from Boeing’s website, China Southern Airlines has 16 of the aircrafts, with 34 more placed on order. Air China has 14 of the planes, while China Eastern Airlines has 13 of them, and Xiamen Airlines has 9 of the planes.
Including Shandong Airlines, Shenzhen Airlines, and Hainan Airlines, Chinese carriers have in total 70 of Boeing’s 737 Max planes as of January 2019.
Issues already surfacing during development period
In May 2017, Boeing had paused the test flights for the 737 Max due to quality concerns with the engine. The engines are produced by CFM International, a company jointly owned by France's Safran Aircraft Engines and GE Aviation.
In the Lion Air crash in October, a preliminary report showed that the pilots had struggled to maintain control following an equipment malfunction. The 737 Max has been receiving growing scepticism from the aerospace community on its reliability ever since the Lion Air accident.
The Max carriers are the latest versions of the Boeing 737, and any faulty issues will be a big blow to the aeroplane company’s bestseller model.
'Max is a very important program for Boeing in the next decade, as it represents 64% of the company's production to 2032, and has significant operational margins,’ Mr Michel Merluzeau, director of Aerospace & Defense Market Analysis told AFP.
Mr Merluzeau said the next 24 hours will be crucial for Boeing to manage the crisis with both travellers and investors who are worried about the reliability of its plane.
Boeing’s stock fell 6.6% after the Lion Air 737 Max crash, but that day also saw some correction in the market as it was close to the tail end of 2018.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.