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U.S. Airlines, Boeing Ground All 737 MAX Aircraft After FAA Reversal

U.S. Airlines, Boeing Ground All 737 MAX Aircraft After FAA Reversal


U.S. regulators have temporarily grounded all 371 Boeing 737 MAX aircraft operated by U.S. airlines and prohibiting those operated by non-domestic carriers from flying in U.S. territory.

The Federal Aviation Administration (FAA) made the decision on March 13 after collecting new evidence at the crash site of the Ethiopian Airlines jet that crashed on March 10 near Addis Ababa, killing all 157 on board.

"This evidence, together with newly refined satellite data available to FAA this morning, led to this decision," the FAA said in a statement.

A statement from Boeing Co (NYSE: BA) suggested that the decision was also based on the Seattle-based company's recommendation.

"Boeing has determined - out of an abundance of caution and in order to reassure the flying public of the aircraft's safety - to recommend to the FAA the temporary suspension of operations of the entire global fleet of 371 737 MAX aircraft," after consulting with the FAA and the National Transportation Safety Board (NTSB), Boeing stated, along with "aviation authorities and its customers around the world."

The regulator's action came less than 24 hours after announcing that its review of the accident showed no systemic issues with the airliner, "nor have other civil aviation authorities provided data to us that would warrant action," the agency said in a statement on March 12.

It also follows decisions to ground the aircraft by other international carriers and aviation authorities around the world, including China, Australia and the United Kingdom that had been made in the immediate aftermath. The Ethiopian accident involved the same type of jet that crashed in October 2018 in Indonesia operated by Lion Air.

Few narrow-body aircraft like the 737 MAX are fully "maxed out" with cargo because there are limited volumes in many cargo markets that fit and can regularly fill such aircraft, and therefore the effect of the grounding will have less of an effect on cargo than on passengers.

An assessment made by FreightWaves in anticipation of a decision by the FAA to ground the 737 MAX revealed that in most cases, cargo stowed in the belly of the aircraft would likely find space on other flights, and therefore would not cause a capacity squeeze affecting pricing for shippers.

American Airlines Group (NASDAQ: AAL), which has the world's largest fleet overall, confirmed that the grounding would affect 24 MAX aircraft, which is less than 1% of daily flights. Southwest Airlines stated it was removing its 34 MAX aircraft from service, which account for less than 5% of its daily flights.

The FAA, which is in Ethiopia assisting the NTSB as parties to the investigation, said the grounding will remain in effect pending further investigation, including examination of the aircraft's flight data and cockpit voice recorders.

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