Boeing Max Edges Toward China Return as Test Flights Near
Boeing 737 Max Edges Toward China Return as Test Flights Near
(Bloomberg) -- Chinese aviation officials have signaled they are open to conducting flight tests on Boeing Co.’s 737 Max, a step toward lifting the plane’s grounding in that nation after more than two years, according to people familiar with the matter.
Details of a validation flight for the Max in China are still being worked out, but the discussions are a sign of possible progress in what has become a lengthy standoff over the plane, said the people, who asked not to be identified because the discussions are private. Boeing is preparing to send a delegation of around 35 pilots and engineers to meet with regulators in late July after they undergo weeks of quarantine, one of the people said.
It could still take many months after such a flight before China’s air regulators wrap up their work and lift the flying ban -- particularly if there is no break in the heightened trade tensions between the world’s two largest economies.
China’s regulators in March said they had “major concerns” about the plane, including design changes, new pilot training and the causes of the two Max crashes. But they have said little about why they are taking so much longer to assess the redesign and clear the plane than regulators in the U.S., Europe and Canada. Their lengthy review has fanned speculation that politics is a factor now that the plane has been cleared by more than 170 countries.
“It’s nothing to do with aviation, safety or aviation safety,” Richard Aboulafia, a long-time watcher of the aerospace industry at the Teal Group, said in a recent interview. “It’s way above our pay grades, way above our heads. It’s geopolitics.”
Boeing shares quickly turned positive on the news, closing at $236.77, a 2.15% increase on the day. The shares remain below their peak of $446.01 on March 1, 2019 -- shortly before the Max crash in Ethiopia triggered the worldwide grounding.
The fate of the plane is not only entangled in U.S.-China relations, but it’s also seen as a possible bargaining chip in negotiations between the two countries over aviation trade issues and new jet orders.
China relies heavily on U.S. technology for its new flagship jetliner, expected to make its commercial debut later this year. And China will need U.S. approval if it ever exports the C919 aircraft, while American manufacturers like General Electric Co. stand to benefit as the counterpart to the 737 Max moves forward.
The implications are enormous for Boeing, which is leaning on the commercial comeback of the 737 Max to fund the company’s financial turnaround and to help pay down its $64 billion debt. A lengthy disruption to U.S. production for the jets could weigh on President Joe Biden’s pledge to stoke domestic employment.
Another person familiar with the discussions said China authorities are in talks about performing Max simulator sessions, but declined to say what the prospects are for an actual flight.
Both simulator runs and flight tests preceded the decision to lift the ban in the U.S. and Europe, but some nations haven’t required them before allowing the plane to resume normal operations.
A spokesperson for the Civil Aviation Administration of China said the agency had no update to provide on progress toward the Max’s return to service in the country.
Boeing didn’t address China specifically when asked about the potential for a test flight, saying only that it was working with aviation regulators around the world. “We refer you to those regulators for more information,” the company said in an emailed statement.
China was the first nation to ground the Max, acting within hours of a fatal crash in Ethiopia on March 10, 2019, and hasn’t allowed the single-aisle workhorse to fly since, crimping jet sales in Boeing’s largest overseas market. The U.S. Federal Aviation Administration lifted the grounding in November, and the European Aviation Safety Agency and Transport Canada followed in January.
Under aviation treaty agreements, the FAA took the lead role in recertifying the Max, working closely with the handful of nations that have existing airliner manufacturing sectors. As has occurred with other nations, China has the option of validating the FAA’s work under the treaty.
The FAA has provided China with technical briefings about the work, according to the people.
Typically, one of the final steps before a certification is a test flight. Pilots for the FAA, EASA and Transport Canada all conducted such flights shortly before lifting their flight bans.
Boeing has previously sent delegations to China since the grounding and there’s no guarantee the recent talks will result in the flying ban being lifted.
The Max was grounded for 18 months in the U.S. after the second of two crashes; 346 people were killed in the two accidents. Both crashes were at least partly caused by a flight-control system that malfunctioned, repeatedly prompting the plane to dive on its own.
The system has since been redesigned to prevent it from activating repeatedly and to add redundancy so that it’s less likely to malfunction, among other changes.
Boeing Chief Executive Officer Dave Calhoun has warned that a prolonged trade deadlock threatens its plans to hike output next year of the 737 Max, the Chicago-based company’s main source of revenue. The manufacturer’s longstanding role as a U.S. industrial champion and largest exporter is also in jeopardy.
If the company isn’t allowed to serve the China market, it will “cede global leadership,” Calhoun said last month. “I’ll never give up on that. But it’s going to create real issues for us in the next couple of years if we can’t thaw out some of the trade structure.”
The U.S. is “absolutely working on” pushing China to move on the Max, Commerce Secretary Gina Raimondo said last month in an interview on Bloomberg Television.
Bloomberg Intelligence: Airbus, Boeing 2021 Delivery Plans Mostly Rely on China Recovery
©2021 Bloomberg L.P.