Crash a setback to Boeing's efforts to begin recovery in China

CHICAGO • Boeing faces a new crisis after a 737 jet fell out of the sky in China, renewing concerns about its best-selling family of planes and extending one of the most turbulent periods in the aviation titan's century-long history.

The 737-800 aircraft operated by China Eastern Airlines nose-dived on Monday into mountainous terrain with 132 people on board, prompting the carrier to ground its fleet of the workhorse jets.

The model is part of the so-called "next generation" of 737s that have amassed a good safety record since they were introduced in the 1990s.

The tragedy casts a harsh spotlight on Boeing after two of its 737 Max jets - the latest version of the narrow-body aircraft - plunged to earth in 2018 and 2019, killing 346 people and leading to one of the longest groundings in aviation history.

The latest incident did not involve a Max. Still, it is a setback for Boeing's efforts to rebuild confidence in its safety culture and 737 family of jets, the firm's largest source of revenue. It also jeopardises Boeing's nascent recovery in China, a critical step needed to rebound from three years of financial losses. Boeing had been on the verge of returning its Max aircraft to commercial service in the country, whose regulators were the first to ground the model in 2019.

Monday's crash "comes at an extremely delicate time, with Boeing finally aiming to re-start 737 Max deliveries into China after a three-year halt", JPMorgan analyst Seth Seifman said in a note to clients. "The Chinese authorities' comments in the coming days and weeks will, therefore, be critical for gauging the impact of this tragedy on Boeing's recovery."

Flight MU5735 was cruising more than an hour into its flight from Kunming, the capital of China's Yunnan province, to the port city of Guangzhou when it plunged sharply. The manoeuvre would have likely flung objects and any unbelted passengers violently to the ceiling. In just seconds, the jet went from level flight to a descent rate of almost 31,000 feet (9,450m) per minute, according to data posted by FlightRadar24.

But after about 45 seconds, the descent became less steep and for a few moments, the jet climbed by more than 1,000 feet. It went from 7,425 feet up to 8,600 feet in about 10 seconds, according to the Flight-Radar data, based on information transmitted by the plane.

The climb was short-lived. The jet resumed its dive seconds later. Its last position recorded on the FlightRadar track was about a minute and 35 seconds after the sudden descent began. Video footage showed the aircraft plunging at a near-vertical trajectory behind a mountainside in the Guangxi region.

While investigators searched for clues to the disaster, investors fretted about the implications for the embattled planemaker.

China's airlines have been among the largest customers for the 737. Before the Max grounding, the nation took as many as one-third of the narrow-body jets that rolled out of Boeing's Seattle-area factory each year.

In a sign of the potential thawing in its largest overseas market, Boeing last week sent the first Max across the Pacific Ocean since the jet's grounding to its Chinese delivery centre south of Shanghai.

China has the largest 737-800 fleet, with nearly 1,200, said aviation consultancy IBA Group. This is followed by the United States, Ireland, Russia and Turkey.

After burning through more than US$20 billion (S$27 billion) in grounding-related costs, Boeing's financial turnaround hinges on its ability to resume shipping 737s at a higher volume.

Executives had targeted delivering around 500 Max jets this year, with China's airlines taking their first Boeing narrow-bodies in three years.

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