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Airlines Fear Long Grounding Of Boeing 737 MAX Jets After Ethiopian Crash

Ethiopian Airlines Flight 302 crashed soon after take-off from Addis Ababa last weekend, killing 157 people, the second such calamity involving Boeing’s flagship new model after a jet came down off Indonesia in October with 189 people on board.

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The grounding of Boeing’s 737 MAX jets after the crash in Ethiopia has had no immediate financial impact on airlines using the planes, but it will get painful for the industry the longer they do not fly, companies and analysts said on Friday. 

Ethiopian Airlines Flight 302 crashed soon after take-off from Addis Ababa last weekend, killing 157 people, the second such calamity involving Boeing’s flagship new model after a jet came down off Indonesia in October with 189 people on board.

Investigators in France on Friday examined the black boxes of the jet that crashed in Ethiopia as the global airline industry waited to see if the cause was similar to the disaster in Indonesia.

Regulators have grounded the 737 MAX around the world, and the U.S. planemaker has halted deliveries of the several thousand on order for a model intended to be the future industry workhorse.

Air Canada and United Airlines on Friday became the first major carriers in North America to warn of negative financial implications to business as a consequence of the grounding of the Boeing planes.

Canada’s biggest carrier Air Canada suspended its 2019 financial forecasts, while United Airlines, the No. 3 U.S. carrier, said it would see an adverse effect on its operations if the jets remained grounded heading into the peak summer travel season.

U.S. bank Citi said it expected the grounding to eat into the profits of Southwest Airlines, which operates the world’s biggest 737 MAX fleet, causing a plane shortage for the carrier and likely passenger compensation costs.

For airlines that over-ordered the 737 MAX, the grounding could provide an excuse to delay or cancel purchases, analysts said, though others are scrambling to adjust business plans that bet heavily on the fuel-efficient, longer-range jets.

In both crashes, pilots asked to return minutes into flight.

“It looks like the Lion Air, because the flight only lasted for six minutes,” Ethiopian Airlines Chief Executive Tewolde Gebremariam told state Chinese state news agency Xinhua on Friday. “There is clear similarity between our crash and the Lion Air crash.”

Reuters was not able to reach Tewolde for comment. A link between the two accidents makes blame more likely to lie with Boeing and less likely with the airline.

Parallels between the twin disasters have frightened travellers worldwide and wiped billions of dollars off Boeing stock.


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