March 11, 2019 / 6:50 PM / 7 months ago

Airlines fly Boeing 737 MAX 8 after crash despite China grounding

DUBAI/PARIS, March 11 (Reuters) - Airlines from North America to the Middle East kept flying the 737 MAX 8 on Monday after Boeing said it was safe, in stark contrast with a slide in the planemaker's shares on worries over Sunday's Ethiopian Airlines crash that killed all 157 on board.

It was the second such incident involving the latest model of the plane since October, when all 189 people on board a Lion Air 737 MAX 8 died in Indonesia, putting the jet under the safety spotlight and prompting questions from passengers.

Low-cost giants including Southwest of the United States and Gulf airline flydubai, which rely on short trips and fast turnarounds, said they would continue to fly 737s.

"We remain confident in the safety and airworthiness of our fleet of more than 750 Boeing aircraft," said Dallas-based Southwest, which is the largest MAX 8 operator with 31 in its fleet from an order of nearly 300 MAX aircraft.

The support came despite China ordering its own airlines to ground the jet, the latest version of the industry's most-sold model, a move followed promptly by Indonesia and Ethiopia.

Most others said they had no plans to ground the aircraft, which analysts said would be costly and disruptive for carriers that rely on them to fly directly to specific destinations or to feed customers to hubs for profitable long-haul flights.

Boeing, which had up to $25 billion wiped off its share price on Monday, said that it so far had no basis to issue new guidance to operators. Analysts said this also implied airlines would be unable to recoup any losses from grounding the jet.

"As long as the aircraft is viewed as airworthy by the certification process - which in this case primarily means the Federal Aviation Administration -- airlines will continue to fly it," said James Halstead, managing partner at Aviation Strategy.

American Airlines also backed the jet, which sells for $112 million at list prices or a net value of about $50 million after typical discounts, according to industry sources.

"At this time there are no facts on the cause of the (Ethiopian) accident other than news reports," it said.

Industry sources said pressure could however grow on U.S. authorities to respond to any early findings from a crash probe and U.S. Transportation Secretary Elaine Chao said Washington was reviewing 737 MAX 8 crashes "very seriously".

INDUSTRY WORKHORSE

India's regulator ordered additional maintenance checks but stopped short of grounding 737 MAX 8s as it had found "no significant concern" in a review.

Comair, a small South African airline, suspended flights of the plane.

It is unusual to ground a plane type unless a specific mechanical issue has been identified and can be inspected, said Association of Asia Pacific Airlines head Andrew Herdman.

Some airlines were forced to address concerns from passengers. Southwest said it was responding to customers individually, citing a "friendly, no-change fee policy".

However, it told one Twitter user, "If you would like to change your flight, there would be a difference in fare that would need to be collected for doing so".

The decades-old 737 family is the workhorse of short- to medium-haul travel alongside the Airbus A320. Over four fifths of air transport is on routes that fit the range of both jets.

There are still unanswered questions about the cause of the Lion Air crash 13 minutes after take-off from the Indonesian capital of Jakarta and officials and safety experts said it was too soon to draw links with the Ethiopian incident.

Lion Air declined to comment on the Ethiopian crash.

A different type of 737 operated by flydubai crashed in Russia in 2016, killing all 62 people on board. That incident remains under investigation though a preliminary report suggested pilot error was to blame. (Reporting by Alexander Cornwell in Dubai, Brenda Goh in Shanghai, Stella Qiu in Beijing, David Shepardson in Washington, Jamie Freed in Singapore, Tracy Rucinski in Chicago, Tim Hepher in Paris, Ilona Wissenbach in Frankfurt and Aditi Shah in New Delhi; writing by Alexander Cornwell)

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