Two crashes within five months -- Lion Air Flight 610 in October 2018 off the coast of Indonesia and Ethiopian Airlines Flight 302 in March outside Addis Ababa -- killed 346 people and led to a global grounding of Boeing Co.’s relatively new 737 Max jets, the fourth generation of a venerable brand first flown in 1967. Numerous investigations are under way, including ones looking at how U.S. flight regulators came to certify the airplane. Boeing has abandoned its financial forecast for 2019 as it faces questions about the plane’s development and testing and its own transparency -- as well as potentially sky-high payouts.

1. When will the 737 Max fly again?

Unclear. Boeing has been testing a proposed software fix that it says will address, along with revised pilot training, what probably went wrong in both crashes. That fix requires approval by the U.S. Federal Aviation Administration. Meantime, problems are compounding. The FAA said in June that it had uncovered a new safety issue related to the 737 Max’s flight-control system that requires fixing. The European Union Aviation Safety Agency has its own list of issues it wants Boeing to address, including one involving the autopilot. Southwest Airlines, the largest operator of the grounded jet, said the new safety issue will extend its absence “well beyond” an Oct. 1 target date. A top FAA official said in June that Boeing Chief Executive Officer Dennis Muilenburg was probably right in projecting the Max’s return by the end of 2019.

2. Will air travelers get back on board?

At least 20% of U.S. travelers say they will definitely avoid the plane in the first six months after flights resume, according to a study led by consultant Henry Harteveldt. More than 40% said they’d be willing to take pricier or less convenient flights to stay off the Max. A UBS Group AG survey found that 70% would hesitate to book a flight on the Max. American says its executives and other staff will take the first flights, before paying passengers, as soon as the Max is certified fit to fly. Four of the world’s leading aircraft regulators -- from the U.S., Europe, Canada and Brazil -- have also agreed in principle to coordinate their actions in restoring the jet to service, in a bid to restore public trust.

3. What has this meant for Boeing?


The Chicago-based airline lost more than $38 billion, or 16%, of its market value in the three months after the second crash, and the company in April missed its quarterly earnings estimates for just the second time in five years. (The entire 737 program accounts for almost one-third of Boeing’s operating profit.) On July 7, Saudi Arabia’s Flyadeal became the first airline to officially drop the 737 Max, reversing a commitment to buy as many as 50. Virgin Australia has pushed back delivery of its first 737 Max jets by almost two years. Norwegian Air said it will seek compensation for the grounding of about 1% of its seats. Boeing’s suppliers are feeling the impact as well. CFM International, a joint venture between General Electric Co. and Safran SA, cut output by about 5%, while Safran says it may lower its earnings forecast. On top of all that, there’s the prospect of substantial payouts to the families of passengers if Boeing is found responsible for the crashes.

4. What legal action could Boeing face?

At least 46 claims have been filed by families of victims in the Indonesia crash, with almost as many for the Ethiopian fatalities, court records show. Bloomberg Intelligence estimates Boeing’s litigation risks in the U.S. could amount to $1 billion. In July, Boeing offered $100 million over several years as an “initial outreach” to support the families of victims and others affected by the two crashes. On other legal fronts, the U.S. Justice Department has expanded its probe to include a look into manufacturing of another Boeing aircraft -- the 787 Dreamliner -- at a new plant in South Carolina. The U.S. Securities and Exchange Commission is investigating whether Boeing properly disclosed issues tied to the 737 Max jetliners to investors. Congressional hearings are under way. And Boeing faces proposed class action lawsuits by pilots.

5. What does Boeing say?

CEO Muilenburg, who was criticized for a subdued initial response to the tragedies, has apologized for the accidents and said the situation “will continue to weigh heavily on our hearts and on our minds for years to come.” The company has said it thinks the 737 Max will regain its position as the backbone of its single-aisle fleet for many years to come.

6. How disruptive have the groundings been?

Not very, since there are many more Max jets in production than had been in service. In the U.S., for example, the Max makes up about 3% of the mainline fleet. American Airlines Group Inc. said it has been canceling about 115 flights a day, or about 1.5% of its daily summer schedule. Airlines have used other planes in their fleet or leased aircraft. In one case, Emirates diverted the normally globe-trotting Airbus SE A380 superjumbos into 40-minute trips to replace lost capacity. However, if the grounding drags on it could disrupt the growth plans of airlines dependent on the 737 Max, especially budget carriers.

7. How many 737 Maxes are out there?

The main operators include Southwest (31 in the fleet through May 31), American (24) and Air Canada (24). Chinese airlines account for about 20% of 737 Max deliveries globally. (Click here for the full list.) As of the end of May, Chicago-based Boeing reported 387 deliveries of the single-aisle Max jets to 48 airlines or leasing companies, with orders from around 80 operators for about 4,550 more. Most sales are the Max 8, the model involved in both crashes. (There’s also, from smallest to biggest, a Max 7, 9 and 10.)

8. What do people think caused the crashes?

In both cases, pilots were likely overwhelmed by a new flight control feature added to the Max known as the Maneuvering Characteristics Augmentation System, or MCAS. The system kicked on due to an erroneous sensor reading and started nudging the plane’s nose downward. Pilots commanding the doomed Ethiopian Air jet were hit with a cascade of malfunctions and alarms seconds after taking off from the Ethiopian capital, according to a preliminary report. Indonesia’s preliminary report showed that maintenance and pilot actions were also being reviewed.

9. What’s the purpose of MCAS?

The system activates when the plane appears to be at risk of stalling, a situation in which the wings are losing lift because the jet is climbing too steeply. The use of new, bigger engines on the 737 Max required Boeing’s designers to mount the turbines farther forward on the wings to give them proper ground clearance. That changed the plane’s center of gravity.

10. So what went wrong?

The software had a critical flaw: It relies on the reading from a single sensor called the angle of attack vane, which measures the nose of the plane against onrushing wind. Boeing said there was a simple procedure for shutting off MCAS in case of malfunction. The day before the Lion Air crash, an off-duty pilot on the same aircraft recognized the problem and told the crew how to disable the system, saving the plane.

11. Who approved this system?

The FAA gave final certification to the 737 Max in March 2017, and it entered commercial service two months later. Under a program established in 2005, the FAA had delegated to Boeing the authority to perform some safety-certification work on its behalf. Some FAA employees warned as far back as 2012 that Boeing had too much sway over safety approvals of new aircraft. Boeing said in May that it had known months before the Indonesia crash that the cockpit alert wasn’t working the way it had told buyers, but it didn’t share that with airlines or the FAA until after the Lion Air jet went down.

(An earlier version corrected No. 4 to show the Justice Department not the FAA is investigating the Dreamliner.)

--With assistance from Alan Levin, Julie Johnsson and Paul Geitner.

To contact the reporters on this story: Anurag Kotoky in New Delhi at akotoky@bloomberg.net;Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Grant Clark, Laurence Arnold

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