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Boeing bows to pressure and grounds all 737 MAX’s after US bars aircraft

The aircraft maker said it had decided to ground the 371 MAX planes due to “an abundance of caution” and to reassure the public of the safety of its aircraft

Boeing 737 MAX 8
The UK, China, and Canada are among countries that have already grounded the plane

Boeing Co (NYSE:BA) has bowed to pressure and grounded its entire fleet of 737 MAX aircraft after the US said it would be barring the planes from its airspace.

In a statement, the aircraft maker said it had decided to ground the 371 MAX planes due to “an abundance of caution” and to reassure the public of the safety of its aircraft following consultations with global aviation regulators.

The Federal Aviation Authority (FAA), which regulates aircraft in the US, said on Wednesday afternoon that it had ordered a “temporary grounding” of the planes after new information had shown “some similarities” between two crashes involving the MAX 8 in the last five months.

The move was in contrast to a statement on Tuesday evening when the FAA said that the aircraft had shown “no systemic performance issues” that could justify keeping it out of the skies.

READ: US gives Boeing some respite as it refuses to suspend 737 MAX 8 flights

The US now joins a list of other countries including the UK, China, Canada, Indonesia, Singapore, Australia, Brazil, Mexico, South Africa, and India who have all banned the plane’s use after a crash in Ethiopia on Sunday killed everyone on board.

The accident followed another fatal crash in October involving the MAX 8 in Indonesia, prompting concerns over the safety of the new aircraft model.

While the causes of the two accidents have not yet been confirmed, there is speculation that it may be due to a fault in the stability computer that helps keep the plane in the air.

The accidents and spate of groundings have already taken a heavy toll on Boeing’s share price, which has fallen by around 11% to US$375 since Monday wiping around US$27bn off its market value.

The UK’s decision to ground the aircraft has also caused headaches for travel operators such as TUI AG (LON:TUI), which has around 15 MAX 8s and was forced to switch out the aircraft for others in its fleet to maintain its flight schedule, although to date it has yet to make any cancellations.

READ: TUI confirms UK decision to ground all Boeing 737 MAX 8 aircraft following crashes

The grounding of the MAX 8 could also cause trouble for airlines that have ordered the aircraft and its variants in large numbers.

One is budget carrier Ryanair Holdings PLC (LON:RYA), which currently has around 110 orders for the MAX 200, a high-capacity version of the MAX 8, with options on 100 more to help grow its fleet to 585 by 2024 from its current size of 400.

Quick facts: TUI AG

Price: 367.9 GBX

Market: LSE
Market Cap: £2.17 billion

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