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Boeing scraps 2019 financial forecast, halts share buybacks in wake of 737 MAX disaster

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World’s biggest aerospace corporation was forced to pull its full financial forecast for the current year due to unresolved issues surrounding Boeing’s once best-selling 737 MAX aircraft.

Boeing also announced plans to pause share buybacks, citing “a challenging time for our customers, stakeholders and the company.”

“Across the company, we are focused on safety, returning the 737 MAX to service, and earning and re-earning the trust and confidence of customers, regulators and the flying public,” Boeing Chairman and CEO Dennis Muilenburg said in a statement.

The manufacturer had previously posted a report on the first-quarter earnings that managed to fall in line with analysts’ expectations, while its revenue was slightly less than projected. Boeing’s earning per share totaled the expected $3.16 from January through March, while the revenue amounted to $22.92 billion against $22.98 billion forecasted by London-based provider of financial markets data Refinitiv.

Boeing stressed that the previous guidance didn’t reflect the impact of two crashes of the company’s flagship planes, leading to the grounding of all 737 MAX 8 jets by global regulators, lawsuits from some air carriers and a decline in market value.

According to the producer, more than 135 test and production flights of updated software for the 737 MAX have been carried out so far.

Boeing’s bestseller crashed on March 10 not far from the Ethiopian capital of Addis Ababa six minutes after takeoff on the way to Nairobi, Kenya. The tragedy, which killed 157 people, marked the second crash involving the same jet model in less than six months. In October, the same type of aircraft, operated by Indonesia’s Lion Air, crashed in the Java Sea shortly after takeoff, claiming the lives of 189 people.

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Japan’s first domestic passenger plane since 1960s to challenge Boeing and Airbus

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Mitsubishi Aircraft Corporation, an aviation unit of Japanese industrial giant, is planning to start deliveries of Japan’s first domestically-produced passenger plane since the 1960s as soon as next year.

The 88-passenger jet has a flight range of about 2,000 miles, while a smaller variant can fly up to 76 people for about the same distance. The MRJ (Mitsubishi Regional Jet) made its maiden flight in November 2015 with the first deliveries slated for mid-2020.

Mitsubishi Aircraft Corporation initially planned the first deliveries of the jet for 2008. However, the date was pushed back five times due to production difficulties. Orders for the aircraft that once totaled 474 units from US and Japanese carriers have been reportedly reduced to 407 jets so far.

The Japanese conglomerate, a longtime supplier of aircraft components to Boeing, invested over 600 billion yen ($5.36 billion) into MRJ as of March 2018 with another 200 billion yen ($1.8bn) expected to be pumped into the project by the end of 2020. In October, Mitsubishi announced plans to invest an extra 170 billion yen ($1.5bn) in capital into its aircraft unit, canceling 50 billion yen ($446mn) of the debt owed by the division.

The long-anticipated MRJ, which is designed for local air transportation, may become a peer competitor for such mainstays as Canada’s Bombardier, whose C Series regional planes are marketed as the Airbus A220, after the 2017 acquisition of the unit by the European aerospace giant. The Japanese jet is also expected to provide keen competition to Brazil’s Embraer that announced plans to create a joint venture for Embraer’s airliners in 2018.

The newcomers in the sector of regional air service, such as the Russian Sukhoi Superjet-100 and the Chinese Comac ARJ21, which are currently undergoing test flights, may also challenge Airbus and Boeing.

Mitsubishi is currently involved in legal proceedings with Montreal–based Bombardier. In October, the Canadian aircraft manufacturer filed a lawsuit, accusing the Japanese corporation of stealing secret information and causing Bombardier “to suffer irreparable financial loss.”

Mitsubishi counter-sued, saying that the Canadian aircraft producer had violated antitrust regulations through “a multifaceted scheme to expand its power within the regional jet market by impeding the entrance of a new competing aircraft.”

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American Airlines to keep its Boeing 737 MAX jets grounded until August

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American Airlines has chosen to keep its fleet of Boeing 737 MAX grounded until at least August 19, even if it means canceling 115 flights a day in summer season, as probes into the troubled jet continue and new sales have frozen.

The company, which owns 24 of the embattled jets that were involved in two recent deadly crashes, announced the decision in a letter to employees and customers. AA wants to ensure reliability “for the peak travel season and provide confidence to our customers and team members when it comes to their travel plans,” Chief Executive Doug Parker and President Robert Isom wrote.

The 737 MAX 8 airliners were grounded worldwide after a fatal crash of an Ethiopian Airlines flight, which killed 157 people on board. The incident came months after a crash of the same model operated by Lion Air was apparently linked to the same faulty flight control system.

Parker and Isom have at the same time expressed confidence in Boeing’s ability to fix the problem through software updates and changes to pilot training procedures. The US airline has 24 MAX planes in its fleet and is expected to get 16 more delivered this year. The grounding has already resulted in the cancelation of about 90 flights per day through early June, and the extension may put a strain on American’s ability to meet demand for seats during upcoming peak travel season. As many as 115 daily flights will have to be canceled in August, according to the letter.

The crashes have left Boeing open to criticism over the way it certified the fast-selling model, conducting some of the tests in-house with the permission of the Federal Aviation Authority. Critics say the producer cut corners to fast-track the new model to the market, compromising flight safety as a result.

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Airbus received 58 orders for jets in March

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Airbus received orders for 58 jetliners in March – led by the A350 XWB widebody family in transactions that included a new customer; while delivering 74 aircraft to 40 customers from across its A220, A320, A330, A350 XWB and A380 product lines.

Pacing the month’s new business was Lufthansa Group’s order for 20 additional A350-900s, bringing its total A350 XWB orders to 45. Lufthansa Group is the biggest operator of Airbus aircraft.

Also in March, STARLUX Airlines of Taiwan signed a firm order for 17 A350 XWBs, comprising 12 A350-1000s and five shorter-fuselage A350-900 versions – becoming a new Airbus customer. The airline plans to deploy the aircraft on its premier long-haul services from Taipei to Europe and North America, as well as to selected destinations within the Asia-Pacific region.

Completing the month’s widebody new business was an order for one A350-900 from a private customer.

The single-aisle transaction in March involved 20 A320neo jetliners for an undisclosed customer.

Deliveries in March were composed of 57 A320 Family aircraft (13 in the CEO configuration and 44 NEO versions), eight A350-900s/A350-1000s, five A220s, three A330s (all in the NEO version) and one A380.

Among the month’s notable deliveries was the first A350-900 delivered to Evelop Airlines. With this aircraft – leased from Air Lease Corporation – the Spanish carrier of Barceló Group’s Ávoris travel division becomes the initial holiday/leisure carrier to operate an A350 XWB.

Other milestones in March included the first A380 delivery to Japan’s All Nippon Airways (ANA), which is the 15th operator of the world’s largest passenger aircraft. Additionally, Airbus delivered the no. 1 A330neo for an African airline, with Air Senegal receiving its first A330-900.

In the VIP sector, Airbus provided the first of three ACJ320neo aircraft for Comlux, which will now begin its cabin outfitting by the Comlux Completion centre in the United States. Comlux is the largest customer for Airbus Corporate Jets’ ACJ320neo Family.

Taking the latest orders and cancellations into account, Airbus’ backlog of jetliners remaining to be delivered as of 31 March stood at 7,357 aircraft.

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Confirmed: Auto anti-stall system on before Ethiopian Max jet crash

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It has been confirmed that investigators have determined the automatic anti-stall system as activated before the Ethiopian Airlines Boeing 737 Max jet crash.

This initial determination is based on information from the aircraft’s data and voice recorders, which shows that the malfunctioning automated system may be responsible for the deadly March 10 crash.

This preliminary determination was made known during a briefing at the US Federal Aviation Administration (FAA) yesterday. It is also known that the auto anti-stall system was activated on the Indonesian Lion Air 737 Max jet crash.

The preliminary findings could be revised, but right now they point to the system, called MCAS (or Maneuvering Characteristics Augmentation System) as the potential cause of both crashes. Regulators say the Ethiopian Airlines Max jet followed a similar flight path to the Lion Air flight, including erratic climbs and descents before crashing minutes after takeoff.

The MCAS system is designed to automatically point the nose of the jets down if it senses potential for a loss of lift, or aerodynamic stall. Aircraft can lose lift from the wings and fall from the sky if the nose points too high. The system also makes the Max fly similarly to older generations of Boeing’s 737, negating the need for a lot of added pilot training.

Boeing is working on a software update to the auto anti-stall system so that the nose will point down only once instead of around 21 times as happened in the Lion Air crash making it easier for pilots to override it.

Ethiopian officials are expected to release their preliminary report soon.

The 737 Max 8 has been grounded worldwide due to the crashes as Boeing works on an update to its software to make the planes safer.

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