Canada Grounds Boeing 737 Max as FAA Loses One of Key Allies

(Bloomberg) -- Canada suspended flights of Boeing Co.’s 737 Max planes, joining a global rush to ground the single-aisle jetliner after the second deadly crash in five months.

The safety notice restricts the 737 Max 8 or Max 9 from operating in or flying over Canada, effective immediately, Transport Minister Marc Garneau said Wednesday in Ottawa. The decision was based on new but inconclusive satellite data that suggests similarities between a fatal Ethiopian Airlines crash March 10 and a deadly October accident in Indonesia, he said.

Canada is halting flights of the 737 Max a day after the U.S. Federal Aviation Administration reiterated its view that there is “no basis’’ for grounding Boeing’s revamped single-aisle workhorse, which debuted in May 2017. The jet’s operations have already been blocked by regulators in China, the U.K., the European Union and a slew of other countries.

“It’s unfortunate, but we must put safety at the top of the agenda” he said, confirming that it affects domestic carriers including Air Canada, WestJet Airlines Ltd. and Sunwing, as well as international airlines. “Hopefully we’ll be able to resolve this issue in the coming weeks and get the Max 8 back up and flying, but for the moment, caution has to dominate.”

Boeing shares were down 0.3 percent at $374.20 at 1:54 p.m. in New York. The company lost almost $27 billion in market value this week through Tuesday after posting the biggest two-day drop in almost a decade. Air Canada shares initially fell after the announcement but were up about 1 percent while WestJet was down 1.4 percent.

Air Canada has 24 of the 737 Max jets, according to company data. Calgary-based WestJet operates 13. Sunwing, a charter carrier, has four of the planes.

Air Canada said in a statement that it would comply immediately with the order, and attempt to rebook passengers from the Max jets, which typically have more than 160 seats. Air Canada’s fleet of 737 Max airliners carry between 9,000 and 12,000 passengers a day.

“We fully support this decision and will continue to work with Transport Canada towards resolution of this situation as soon as possible,” the Montreal-based airline said.

WestJet also said it would comply with the order, adding that it has 162 other planes in service. Sunwing had already grounded its four 737 Max 8 planes “for evolving commercial reasons unrelated to safety,” including airspace restrictions by other countries, the company said.

Possible Similarities

Garneau said satellite tracking data received overnight suggests possible “similarities” between the Ethiopian Airlines and Lion Air crashes. He stressed that it’s not conclusive but that it was enough to order the safety measures. “There are some similarities between the two profiles,” he said.

Canadian authorities received the information from “an organization,” he said, declining to say which. They compared the flight patterns of the Ethiopian Airlines jet against Lion Air, saying authorities have a clearer knowledge of what happened in the earlier crash.

“The pilot was fighting against the computer software, which wanted to drop the nose of the aircraft” and “eventually there was a loss of control,” said Garneau, a former astronaut. The similarities suggested something similar was possible with the latest flight, he said.

“This is not the proof that it’s the same root problem. It could be something else,” he said. “It crossed a threshold, in our minds, in terms of the profile.”

As recently as last night, Garneau was telling fellow lawmakers it was too soon to reach conclusions. A total of 18 Canadians were killed in the latest crash.

“This was a great loss for our country, so it is something that has really viscerally caught the attention of Canadians,” Garneau said.

Garneau said that Canada notified U.S. authorities Wednesday morning of its decision, but didn’t receive any political pressure to reverse it.

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