Boeing Chief Executive Dennis Muilenburg speaks during a press conference after the annual shareholders meeting at the Field Museum on April 29, 2019 in Chicago, Illinois.
Jim Young—Pool/Getty Images
By David Meyer
May 22, 2019

Good morning. David Meyer here, filling in for Alan from Berlin.

It’s another tough week for Boeing, which is facing increased scrutiny from aviation regulators and a bunch of huge compensation claims over the grounding of its 737 Max fleet and delivery delays.

Tomorrow, global regulators will meet in Texas to discuss Boeing’s bid to get its planes back in service—the company has rolled out software updates to the 737 Max jets and wants to start training pilots on the changes.

The updates and training should, Boeing hopes, reduce the likelihood of bad sensor data accidentally triggering the aircraft’s anti-stall mechanisms, which may be what caused the fatal Lion Air and Ethiopian Airlines crashes (though Boeing’s shares are currently up following a report saying a bird strike may have caused the Ethiopian Airlines disaster.)

Boeing’s problem is that the 737 Max saga is changing the regulatory landscape. Until now, it’s been standard practice for all major air regulators to green-light a plane if one of them certifies it as airworthy. But the Federal Aviation Administration now has a “credibility problem,” as House aviation subcommittee chair Rick Larsen put it during a hearing last week, following reports that the FAA had given Boeing employees too much of a role in its certification of Boeing’s planes.

The European Aviation Safety Agency is now unwilling to take the FAA’s word for it when it comes to certifying Boeing. As reported by the Financial Times, EASA said it would have to approve and mandate Boeing’s design changes itself, and judge whether pilots have been “adequately trained” in them, before allowing the 737 Max back into European skies. That could mean a slowdown of the planes’ redeployment.

Meanwhile, Boeing is facing yet more calls for compensation. Earlier this week, Ryanair chief Michael O’Leary added his voice to the throng of those calling for a payout, due to 737 Max delivery delays. But now China’s biggest three airlines—Air China, China Southern and China Eastern—have filed claims for compensation over the grounding and over delivery delays. China operates the world’s biggest 737 Max fleet, so this is going to hurt.

Perhaps we can even expect the Boeing narrative to blend into that of the U.S.-China trade war, which shows no sign of improvement. One Trump administration official told the FT that the regulatory splintering over the 737 Max affair could give China an opportunity to “start shutting out U.S. airplanes, as a way to boost its own aircraft manufacturing industry.”

More news below. And incidentally, Fortune‘s Aaron Pressman has a great piece out this morning about defense contractor Leidos (No. 311 on the Fortune 500 list,) which built an A.I.-powered ship that sailed from San Diego to Hawaii and back without pesky human guidance. Have a read, and do savor the headline.

David Meyer


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