Boeing on the mend
Ethiopian Airlines has been a reliable customer of the American aerospace company, Boeing, for more than 60 years. Ethiopian has been operating only Boeing aircraft on mid and long haul flights. In the 1960s
it was the first African carrier to acquire the B720 jetliner. In the 1980s it was the second in the world and the first in Africa to operate the B767. In 2012 again it was the third airline in the world and the first in Africa to take delivery of the B787 Dreamliner air planes. In June 2018 Ethiopian was the second African carrier to take delivery of the B737 MAX aircraft. Following the tragic accident of ET302 executives of Ethiopian and Boeing had some misunderstandings but now it seems that they have come to terms to amicably resolve the outstanding issue. Kaleyesus Bekele of The Reporter spoke to Joao Miguel Santos, managing director for Sub-Saharan Africa at Boeing, on the sidelines of the African Airlines Association Annual General Assembly, which was held in Mauritius. Excerpts:
The Reporter: Tells us about your relationship with Ethiopian Airlines?
Joao Miguel Santos: Ethiopian Airlines has been a long-term and reliable customer of Boeing for the past many years. They were one of the launch customers of Boeing 707 jet in 1958. Ethiopian Airlines is one of the best airlines in Africa. I have been working closely with the former CEO Girma Wake and the current CEO Tewolde Gebremariam.
What effort is being exerted to compensate the victims of Ethiopian Boeing 737 MAX (ET302) plane crash victims?
There are two issues here. One is the victims of the crash and the other is the airline itself. Before we get into this, this has been a difficult time for Boeing and our customer Ethiopian Airlines and definitely for the industry and for Africa. We are deeply sorry that this has happened. For some of us (I am from Angola) it will always weigh heavily on our hearts that it has happened. Yes, we are going to compensate Ethiopian Airlines. It will receive some compensation. But this will be strictly between Boeing and Ethiopian. There are several airlines that we are working with. Airlines that have grounded their MAX planes. Every airline is unique. Every airline has different number of planes and different ground time. So compensation is a matter of discussion between Boeing and the airline just like a contract. You do not disclose the details of a contract.
What about the compensation for the lost aircraft in the accident and the lost revenue due to the grounded MAX fleet? Are you going to take that all into consideration?
Yes we will. In our discussions with the airline team we try to understand how best to address their needs. In reference to the families of the crash victims, as you know, we have established a USD 100 million fund which also includes Boeing’s employees’ contribution. We, as Boeing employees, can make contribution and add to that fund as well. We hired a firm in the US that is now responsible to best understand how we should distribute the compensation to the crash victims’ families.
How are you going to deal with the crash victims’ families? Some of them have filed law suits against Boeing in US courts. And some have not. So how are you going to deal with them?
The families left behind are going to be compensated out of this 100 million fund. In some way that is equitable.
Fifty-fifty between Ethiopia and Indonesia (Lion Air)?
I do not think it is distributed in that way. This is separate from the airline’s compensation. The compensations that are going to be made to the airline is based on the discussion with each operator. There are a wide variety of issues that would be considered from our side and from the customer’s side. We hope we will find equitable solution for both of us. The compensation to the families of the crash victims is a completely different issue. Some people have already filed law suit against Boeing. We are not going to discuss that here. It has to go through the courts. Some have been settled. Some have not been settled. They have the right to exercise what they want to do. It is a tough time.
What about the farmers at the crash site? There are about ten farmers at the crash site whose farmlands have been fenced and they have been unable to farm and feed their families. Do you have a plan to compensate these farmers?
Some amount of the USD 100 million fund will be used to aid the affected community-farmers. It could be building access roads or equipment supply whatever it may be. It will be used in the best interests of the farmers who are affected by the accident. Some amount of that fund is destined to the farmers.
Do you think that this accident would anyway impact the long standing relationship between Boeing and Ethiopian Airlines?
I hope it will not. It is a difficult time for our customer, Ethiopian Airlines. I am from Africa and I have been working in Africa basically 35 year out of my 40 year carrier with Boeing and over the last three years we have had zero accident fatalities until this accident. It is unfortunate that this happened. We are truly sorry that this has happened. Our relationship with Ethiopian Airlines is strong ever since we started with B707. In Africa, we delivered two to Ethiopian Airlines in 1958. So we had strong relationship with the airline. The airline is a beacon of hope in the commercial aviation in Africa. I respect the CEO of Ethiopian Airlines, Tewolde Gebremariam, enormously. He has led the airline to unprecedented growth and expansion. We want to continue to be part of that growth and expansion. We will continue to do everything possible so that we can to be a good partner to Ethiopian Airlines. Our key concern today is making sure that the MAX plane comes back to operation. By the time all is set and done, it will be the safest air plane in operation. It is sad that it took this turn but we look forward to the time Ethiopian Airlines continues to acquire Boeing planes such as the B787 and more MAX planes which they have in order.
There are new reports about a crack discovered on the wings of the B737 NG planes. What precautions should carriers take, including Ethiopian Airlines?
It is not just a report but it is a fact. It is not necessarily on the wing but there is what we call pickle fork. It is an extrusion, a very large extrusion that the wing sits on. The US Federal Aviation Administration (FAA) has issued an air worthiness directive. Based on the technical checkups made so far, the crack was found on only 52 airplanes out of the large number of B737 NG planes that are in operation. We have already the fix for the crack and I am pleased to say that we have made a decision to cover the cost for our customers with that fix both in terms of parts and labor. FAA has issued another statement asking that all the planes be inspected again so all the airlines are going through inspecting their aircraft. It is not unusual what has happened. Things have happened in the past to a lot of other planes. As you know, the B737 NGs have been in service for many years and there is a crack and we are fixing that crack. We are trying to make sure that our customers’ parts and labor are covered. This has happened to less than five percent of the 1,100 B737 NGs that have undergone initial inspection.
What is Boeing doing to regain the customers’ confidence?
It is a good question. We are not going to rebrand the air plane. It remains to be the B737 MAX. We have another 4400 MAX planes on order. We have had no cancellation. From the positive side we have a good order book that guarantees the continuation of the aircraft. We have had no cancellation because of the accident. We are working very closely with our customers that are affected. We are also working with our customers who have not grounded aircraft but who have aircraft on order. We are treating them in the same way. We are working with our customers. We are working with the pilot community, and the cabin crew community. We are going to be on board the first flight. We are going to do demonstration flight.
Some of the American carriers American and South West airlines recently announced that they are going to put their aircraft back to operation as soon as it is recertified by the regulatory agencies. We will do brand recognition and improving and demonstration flights to prove that the aircraft is safe to fly. We have done surveys of how people perceive. Most people believe that if the regulators recertify the aircraft and the pilots are going to sit on the planes to fly them they would fly. We will do brand recognition and demonstration flights in collaboration with the airlines. We will do image enhancing measures. We are not doing all by our own. We are working with our customer airlines.
We are asking our customers what we can do and how we can assist them to regain the confidence of their customers.
There is a lot of discussion about the recertification process. We will follow what the regulators tell us. Eventually the return to service of the air plane will be based on the regulators. We will provide all the information they ask. We had 20 conferences worldwide with regulators and pilot community of the different countries affected in which 1100 participants came to see the simulators and the changes that we are making.
As of November 17, we have conducted 926 MAX flights, totaling 1,703 hours, with the updated software. Meanwhile, Boeing has been working closely with the US Federal Aviation Administration and other global regulators on the certification of the software update and training package. It is not like the aircraft are on the ground and that we are not doing nothing. We want to demonstrate the changes that are made to software are doing what they are supposed to do.
What is your message to those who are affected by the accident?
We are truly sorry that this happened. We wish that it had never happened but it did. Now we are doing everything we can to make sure that it will never happen again. Our colleagues have recently visited the crash site. We have had Boeing’s people on location since the accident. It is not like that the accident happened and Boeing was not there. Boeing has been there since the accident occurred.
We cannot get ahead of the regulators. For example, the Ethiopian regulatory agency has not yet published its report. We have to wait until that report is published.
In Indonesia the final accident investigation report was published and it is available for everybody. The NTSB (the National Transportation Safety Board) was involved in it. In Ethiopia we have to wait for the final investigation report. More importantly, for the people of Ethiopia, I would like to say that we are very sorry that this has happened. We wish it has never happened. We hope it will never happen again. We are doing everything we can to assure that it doesn’t happen again. We are truly sorry. Our thoughts are with the families left behind.
Can you tell us about the current market share of Boeing and your outlook on the African aircraft market?
We announced our latest market outlook in July 2019 in which 1,160 aircraft we believe Africa would require over the next 20 years. Having said that I am the proponent of the Single African Air Transport Market (SAATM) for years and Tewolde Gebremariam knows me for pushing that for years. Look at what Ethiopian Airlines is doing. They are flying in Mozambique, Togo, Malawi, Zambia etc. With the implementation of SAATM, the number would be much bigger than that. We will need time to see how things will evolve. Right now it is 1,160 aircraft that Africa would need over the next 20 years. It is nice to talk about those great numbers but it is important to realize what do you need to keep flying and operating and maintain with these number of planes and the numbers are staggering.
Africa needs 28,000 aircraft mechanics and 22,000 pilots to be able to support this growth. Where is Africa going to find all these pilots and mechanics? We need create the means in Africa to bring young people to the aviation sector and get them proper training to become pilots, engineers, flight attendants and mechanics. Because, without them, it does not do any good to have a lot of air planes. If not you would end up hiring expatriates. When you hire expatriates your costs go through the roof.
With regards to our market share we have 460 air planes in operation starting from our first delivery to Ethiopian – the B707 in 1958. Our market share is close to 70 percent in Africa today. So it is a healthy market share. Personally, I want to keep it that way. May be increase it a little more. I should not be satisfied with the status quo. I respect our competition Airbus, Embraer, Bombardier – they are good healthy competitors. It keeps the whole industry honest. It will enable us all to come up with better technology.
How do you see the competition coming from your rival Airbus? Start-up African airlines are ordering for Airbus jetliners.
I actually have personal friends at Airbus. It is a healthy competition. It is strong. We are doing things in a different way. We approach customers in a different way. Boeing will continue doing what it has been doing for many years – trying to develop strong partnership with our customers. Competition, like I said, is good.