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FEBRUARY 2023

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Addendum

Boeing’s MAX woes easing in China

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February 1st 2023

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There has been good news and not so good news for Boeing in recent weeks. Read More » Firstly, its troubled B737 MAX finally won approval from Chinese regulators to return to the air on the Mainland. On January 7, the first commercial MAX flight for almost four years, operated by China Southern Airlines, flew Guangzhou to Zhengzhou. A second MAX took off from Guangzhou later in the day, flying to the central city of Wuhan. Fuzhou Airlines also has started operating the type.

China was among the first countries to ground the Boeing type after two fatal accidents involving its flight control software in 2018 and 2019 and is the last major Boeing market to rescind the ban. The Seattle plane maker made little comment except to say “Boeing continues to work with global regulators and customers to safely return the 737 MAX to service worldwide”.

Beijing had deemed the jet airworthy in December 2021, suggesting it would return to Chinese airspace by “the end of the year or early (2022)”. That prediction proved premature as the need to clear final hurdles with Chinese regulators meant the wait was longer than expected.

Lingering trade tensions with the U.S. slowed progress.

Mainland airlines ordered more than 160 MAX jets and nearly 60 of them had been delivered before the ban. But in March 2021, Chinese aviation lessor, China Aircraft Leasing Corporation (CALC), slashed its commitment for the MAX by 26 planes, reducing its order to 66 of the aircraft.

But the not so good news for Boeing continued in January when it was informed its legal nightmare over the two fatal MAX crashes - 346 people died in the accidents involving Indonesia’s Lion Air and Ethiopian Airlines - is far from over.

The U.S. Justice Department had investigated Boeing and settled the case in January 2021. After negotiations, the government agreed not to prosecute Boeing on a charge of defrauding the U.S. by deceiving regulators who approved the plane.

In exchange, the company paid $2.5 billion - a $243.6 million fine, a $500 million fund for victim compensation and nearly $1.8 billion to airlines whose MAX jets were grounded.

But families of the crash victims persisted in attempting to convince a federal judge to throw out the settlement.

U.S. District Court judge, Reed O’Connor, ordered a representative of the company to appear in court in Fort Worth, Texas on January 26 to be arraigned on a 2021 felony charge after families of the victims objected to a plea deal.

Boeing, represented by its chief safety officer and a strong team of lawyers, pleaded not guilty to a charge it misled regulators who approved the MAX. Judge O’Connor took the plea and ordered the company not to break any laws for the next year. The judge delayed ruling on a request by the victims’ families to appoint a special monitor to examine safety issues at the aerospace OEM. Boeing and the Justice Department opposed the request.

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