Spotlight Boeing: Global Consent Difficult, China Retaliation, Compensation Woes
Global Consensus Will Be Difficult
The New York Times reports To Get Boeing 737 Max Flying, Global Consensus Will Be Hard
Aviation regulators from around the world, who met in Fort Worth on Thursday, are continuing to press the F.A.A. for details on the fix to the anti-stall system blamed for two deadly crashes involving the Max, as well as the process for assessing the software, according to an F.A.A. official. One big sticking point: whether to require that pilots undergo additional training on a flight simulator.
If some regulators did require training, the condition would mean that the plane could be out of service in certain countries for months longer than expected. Boeing had recently outlined a target of late June to airlines. But the F.A.A. has been more circumspect.
“We can’t be driven by some arbitrary timeline,” Daniel Elwell, the acting F.A.A. administrator, said on Thursday. “I don’t have September as a target, I don’t have June as a target.”
The F.A.A. suggested last month that it would not require pilots in the United States to spend more time on a simulator. But that matter is not yet settled.
If Wishes Were Fishes
Even if the FAA agrees no simulation training is requires, don’t expect foreign governments to be so kind.
The Chinese aviation authorities and regulators from other emerging markets could be holdouts. They appear more likely to insist that their pilots — many of whom have less experience than their American, European and Canadian counterparts — train on simulators, according to a person briefed on the discussions.
Boeing has told its airline customers that the Chinese regulator is the biggest wild card. China was the first nation to ground the Max after the Ethiopian Airlines crash in March, citing concerns over whether pilots could manually control the plane if it ran into problems.
Delaying its approval for the Max could also provide China leverage in the trade war with the United States. Boeing aircraft are one of the largest American exports to China by dollar value, and an obvious target for officials in Beijing if they want to further retaliate.
China and the EU
China and the EU are unlikely to cooperate with the FAA even if the FAA rules in favor of Boeing.
- China won’t cooperate thanks to Trump’s trade negotiation tactics.
- The EU has a chance to promote Airbus as well as strike back against Trump’s proposed auto tariffs.
Compensation Claims Mount
As Boeing awaits the FAA’s decision, Compensation Claims Against Boeing Beginning to Ramp Up.
Airlines are increasingly going public with desires to be compensated by Boeing for the grounding of the 737 MAX.
Norwegian Air Shuttle and Spice Jet said shortly after the MAX grounding March 13 they were going to seek compensation from Boeing.
Air China has asked for compensation, reports Reuters. Other airlines with grounded MAXes are also beginning to notify Boeing about compensation claims.
Compensation for delivery delays is also a risk to Boeing. This already has reached $1bn, one aviation lawyer estimates, and stands to climb by billions more, depending on how long new deliveries are delayed.
Boeing’s legal department is already notifying some customers that the grounding falls within the “excusable delay” clause of sales contracts.
737 Max Orders and Grounded Planes
Boeing is a very big deal.
To say that Trump isn’t helping matters is more than a bit of an understatement.
Three Discussion Ideas
- Unwinnable Trade War: Who Will Win the Trade War? Some Say China, Others Say Trump
- Rare Earth Hardball: Last week I noted China Threatens to Cut Off US Supply of Rare Earth Elements. Today the Financial Times commented similarly: China’s state planner suggests using rare earths in US trade war
- Trade War Over Soon? Trump Says “Trade War Could be Over Quickly” Why Should Anyone Believe Him?
China striking back at the US would hurt China as well, but it is prepared to do so.
Trump faces an election, Xi Jinping, China’s leader, doesn’t.
Claims that the US have already won the trade war are preposterous.
Mike “Mish” Shedlock