China Is Said to Ground Domestic Boeing 737 Max Jets After Crash

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This file photograph taken on January 26, 2010, shows an Ethiopian Boeing 777 aircraft as it leaves a hanger in Nairobi. AFP PHOTO
This file photograph taken on January 26, 2010, shows an Ethiopian Boeing 777 aircraft as it leaves a hanger in Nairobi. AFP PHOTO

China grounded its entire domestic fleet of Boeing Co. 737 Max planes after a model crashed in Africa on Sunday, a person familiar with the matter said, as scrutiny intensifies on the U.S. manufacturer’s best-selling jet.

The country’s aviation regulator issued the order early on Monday local time, the person said. Ethiopian Airlines’ flight ET302 plunged to the ground minutes after leaving Addis Ababa en route to Nairobi, Kenya, killing all 157 people on board in what was the second deadly accidents in five months involving the model.

A blanket grounding in one of the world’s biggest and influential travel markets is a further blow to Boeing’s reputation — and a potential threat to the Chicago-based planemaker’s finances. Chinese carriers account for about 20 percent of 737 Max deliveries worldwide through January, according to the company’s website.

China Southern Airlines Co. has 16 of the aircraft, with another 34 on order, according to data through January on Boeing’s website. China Eastern Airlines Corp. has 13, while Air China Ltd. has 14, Boeing says. Other Chinese airlines to have bought the Max include Hainan Airlines Holdings Co. and Shandong Airlines Co., the data show.

The single-aisle plane accounts for almost one-third of Boeing’s operating profit and is poised to generate about $30 billion in annual revenue as factory output rises to a 57-jet monthly pace this year, according to Bloomberg Intelligence estimates.

The disaster in Ethiopia followed the crash of a Lion Air 737 Max into the Java Sea off the coast of Indonesia on Oct. 29. A preliminary report into that disaster, which killed 189 passengers and crew, indicated that pilots struggled to maintain control following an equipment malfunction.

Indonesia’s transportation safety committee said Monday it will discussthe possibility of grounding Boeing 737 Max jets operated by the nation’s airlines. Jet Airways India Ltd. and SpiceJet Ltd., two Indian airlines that use the 737 Max jet, and the country’s regulators have asked Boeing for information following the Ethiopia crash.

Cayman Airways, the flag carrier airline of the Cayman Islands, says it is suspending operations of both its Boeing 737 Max 8 aircraft effective March 11 “until more information is received.”

A Boeing representative didn’t immediately respond to a request for comment. Boeing earlier said it was preparing to send a technical team to assist the accident investigation of the Ethiopian Airlines plane, which was delivered new in November to Africa’s biggest carrier.

Calls to Civil Aviation Administration of China’s aviation safety office and administrative office before regular business hours went unanswered. Caijing earlier reported the grounding of the model.

-Bloomberg

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