The fuselage plug area of the Boeing 737-9 MAX, which was forced to make an emergency landing in Portland, Oregon. NTSB / Reuters
The fuselage plug area of the Boeing 737-9 MAX, which was forced to make an emergency landing in Portland, Oregon. NTSB / Reuters
The fuselage plug area of the Boeing 737-9 MAX, which was forced to make an emergency landing in Portland, Oregon. NTSB / Reuters
The fuselage plug area of the Boeing 737-9 MAX, which was forced to make an emergency landing in Portland, Oregon. NTSB / Reuters

Boeing urged to co-operate with US investigations into 737 Max aircraft


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The head of the US Transportation Department on Monday called on Boeing to co-operate with federal investigations after media reported the Department of Justice has opened an investigation into the plane maker's 737 Max 9 door plug blowout.

Federal regulators are said to have contacted some passengers and crew who were on the January 5 Alaska Airlines flight, The Wall Street Journal first reported.

The report followed testimony from the head of the National Transportation Safety Board Jennifer Homendy, who told Congress that Boeing refused to identify employees who worked on door panels on Boeing 737 aircraft.

She also said the manufacturer did not provide documentation about a repair job that included reinstalling the door panel.

Boeing said it had provided the information to the NTSB after the Senate hearing.

In a March 6 statement, Boeing said: "Early in the investigation, we provided the NTSB with names of Boeing employees, including door specialists, who we believed would have relevant information. We have now provided the full list of individuals on the 737 door team, in response to a recent request."

The company also said that regarding documentation, if the door plug removal was undocumented, there would be no documentation to share.

“We respect the independence of DOJ and NTSB doing their own work, but we're not neutral on the question of whether Boeing should fully co-operate with any entity: NTSB, us or DOJ. They should, and we expect them to,” Transportation Secretary Pete Buttigieg said.

The Justice Department has also convened a grand jury, which has the power to issue subpoenas for interviews and documents, the Post reported.

In a preliminary report, the NTSB found that the four bolts that should have prevented the panel from blowing off were apparently missing.

The NTSB and Federal Aviation Administration are also investigating other safety practices at Boeing.

The FAA audit of Boeing's 737 Max production process after the Alaska Airlines incident failed 33 of 89 tests, The New York Times reported on Monday.

The supplier, Spirit AeroSystems, the maker of fuselage parts for the 737 Max aircraft, passed six of 13 audits and failed the rest, it said.

Earlier this month, Boeing said it was in talks to reacquire Spirit AeroSystems, which it spun out in 2005, marking a shift in stance regarding outsourcing by the US plane maker.

The reintegration of Spirit into Boeing would address safety concerns, which came to a head after the Alaska Airlines' panel blowout incident.

“We believe that the reintegration of Boeing and Spirit AeroSystems' manufacturing operations would further strengthen aviation safety, improve quality and serve the interests of our customers, employees, and shareholders,” Boeing said at the time.

The 737 is Boeing's most popular aircraft. The Alaska Airlines incident is the latest issue to affect the company’s best-selling jet, which was grounded for two years, in March 2019, after a defect in its flight stabilising system was involved in two fatal crashes.

In February, the FAA gave Boeing 90 days to come up with a plan to improve quality and meet safety standards after the blowout of a door panel on one of its 737 Max planes in January.

Emirates airline president Tim Clark called for changes earlier this month at Boeing after a series of technical issues in the past couple of months brought the regulatory focus back on the US plane maker.

Dubai's Emirates, the world's biggest long-haul airline and one of Boeing's biggest customers has also said it will send its own engineers to observe the production process of Boeing's 777 aircraft and Spirit following the latest safety issues.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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What can you do?

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Seek professional advice from a legal expert

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Updated: March 12, 2024, 5:16 AM