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Boeing Pushes Back 737 Max Return Again

The return of Boeing’s 737 Max has been delayed again. On Tuesday, the company said it did not expect regulators to approve the jet to fly again until the middle of the year. American Airlines, United and Southwest had already taken Max flights off their schedules until June, and if this new timeline holds, it would further push back when the plane will be available for commercial flights.

The announcement reflects Boeing’s new appreciation for the challenges facing the company in its effort to persuade regulators that the Max is ready to fly. Boeing and the Federal Aviation Administration have continued to find new flaws with the Max that go beyond an automated software system known as MCAS. The software contributed to two accidents, in late 2018 and early 2019, that killed 346 people and led to the worldwide grounding of the Max in March.

But the new estimate is conservative and intended in part to give Boeing some leeway with airline customers, who became frustrated over the past 10 months after the company repeatedly missed its own optimistic deadlines for the plane’s return to service, according to three people familiar with the matter. If regulators find no new problems with the plane, they could lift the grounding by the spring, the people said.

Once the plane is cleared to fly, it will take airlines weeks to reintegrate them into their commercial schedules. The three United States carriers that fly the Max — American, United and Southwest — had already pushed back Max flights until June. They did not immediately change those schedules in response to Tuesday’s announcement.

“Returning the Max safely to service is our No. 1 priority, and we are confident that will happen,” the company said in a statement. “We acknowledge and regret the continued difficulties that the grounding of the 737 Max has presented to our customers, our regulators, our suppliers and the flying public.”

Late last year, Boeing discovered a potential problem with wire bundles on the plane, which were placed so close together that an electrical short could cause a catastrophic accident. In assessing the issue, the company recently identified about a dozen places in the Max where wire bundles may need to be separated, including in the electrical bay under the cockpit, according to two people familiar with the situation who spoke on the condition of anonymity to discuss internal matters. The company is still analyzing whether it needs to separate the wire bundles, the people said.

Boeing is also working through a separate software problem that prevented its flight control computers from turning on. And this month, the company told airlines that it would recommend flight simulator training for pilots before flying the Max. That could delay the return of the plane even after regulatory approval since it will take longer than the iPad lesson the company was originally planning to give pilots.

The company needs to reach several key milestones before the Max is cleared to fly. International regulators must conduct flight simulator tests with pilots from airlines around the globe. Boeing still needs to conduct a certification test flight with the F.A.A., the Max’s final exam with regulators, which also may happen by the end of next month, according to two people with knowledge of the process.

The grounding of the Max is the worst crisis in the 117-year history of Boeing, which is the largest manufacturing exporter in the United States. It has cost the company billions of dollars, led to the ouster of its chief executive and disrupted the global aviation industry. Last month, Boeing announced that it would temporarily halt production of the Max, a move that rippled through its network of thousands of suppliers. One supplier, Spirit AeroSystems, announced that it was laying off 2,800 employees.

The mass cancellation of flights caused by the grounding has led to steep losses for airlines, which have scrambled to fill key routes without a workhorse jet. Several airlines, which pay roughly $100 million each for the Max planes, have reached settlements with Boeing to compensate for those losses.

Boeing’s announcement on Tuesday was a departure from the company’s handling of the crisis under its previous chief executive, Dennis A. Muilenburg, who was prone to making overly optimistic projections about how quickly the plane would fly again.

Boeing prepared the estimate on the Max’s approval for its own financial planning in advance of the company’s report on quarterly earnings next week, said Gordon Johndroe, a company spokesman. It did not expect any layoffs as a result of the move. (Boeing employs more than 130,000 people, in all 50 states.) The company also wanted to publicize the new timeline before United, Southwest and American Airlines report quarterly earnings this week “to make sure they had our most recent estimate,” Mr. Johndroe said.

Airline stocks, which opened the day down on fears of the potential impact of a deadly viral outbreak in China, continued to slump. United Airlines ended the day down 4.4 percent and United 4.2 percent. Delta dropped by 2.7 percent. Trading of Boeing shares was temporarily halted after CNBC first reported the news of the company’s new timeline on Tuesday. The stock ended the day down 3.3 percent.

Mr. Muilenburg’s replacement, David Calhoun, formally stepped into the chief executive role last week. For its part, the F.A.A. said it was continuing with the process of getting the plane approved to fly again.

“We have set no time frame for when the work will be completed,” the agency said in a statement.

Matt Phillips contributed reporting.


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Japan Issues Arrest Warrant for Carlos Ghosn’s Wife

TOKYO — The Japanese authorities said on Tuesday that they had issued a warrant for the arrest of Carole Ghosn, the wife of Carlos Ghosn, taking direct aim at the family of the fallen auto magnate as they sought to bring him back to the country to face criminal charges.

[Latest updates on Mr. Ghosn’s press conference in Beirut.]

Prosecutors in Tokyo said they had obtained an arrest warrant for Mrs. Ghosn, 53, on suspicion of giving false testimony nine months ago. In a statement, they said Mrs. Ghosn had testified that she did not know a person who was involved in Mr. Ghosn’s case, even though she was in communication with that person while the person was wiring money between companies at Mr. Ghosn’s request.

The statement did not disclose the identities of the person or the companies.

The arrest warrant is the latest twist in an international tale of intrigue. Mr. Ghosn, the architect of the Nissan-Renault-Mitsubishi auto empire, faces charges of financial wrongdoing in Japan. But he fled the country on Dec. 29, flying on private jets first to Turkey and then to Lebanon. Mr. Ghosn is a Lebanese national, and the nation does not extradite its citizens.

In an additional development, the air charter company that flew Mr. Ghosn said in a statement on Tuesday that it was paid only half of the $350,000 fee for the Japan-to-Turkey flight, and that it had received no compensation at all for the second flight from Turkey to Lebanon.

The Ghosn family could not be reached for comment. Mrs. Ghosn, who is a citizen of both Lebanon and the United States, denounced the Japanese arrest warrant in an interview published Tuesday in the French newspaper Le Parisien, calling it “an act of revenge by the prosecutors” meant to put pressure on her husband.

“I find this a belittling act from an alleged great democracy,” she said in the interview, which the newspaper said was conducted in an exclusive hotel in Achrafieh, a neighborhood in eastern Beirut. “I have already been humiliated in Japan, where I have been accused of running away from justice, when this is absolutely false.”

It is not clear how the Japanese arrest warrant would affect her ability to return to the United States, which has an extradition agreement with Japan, or to travel to other countries with extensive ties to Japan.

If she were to travel to the United States, an extradition request from Japan would have to go through diplomatic channels. The Justice and State Departments would review the request and then present it to a federal magistrate for a hearing.

In France, Mr. Ghosn is a citizen but his wife is not. France does not extradite its citizens, but a spokeswoman for the Ministry of Justice, speaking generally, said that “it’s a different case” for someone who is not a French citizen.

While she is in Lebanon, Japan’s options are limited. The authorities in Tokyo have pressed Lebanon to return Mr. Ghosn, a Lebanese citizen, though they acknowledged that Lebanese law forbids the extradition of a citizen.

The Japanese ambassador on Tuesday met with Lebanon’s president, Michel Aoun, but afterward there was no sign that they had made progress toward resolving the issue. A Japanese Justice Ministry official said on Tuesday that the authorities were reviewing Lebanese law and working with Japan’s Foreign Ministry.

Japanese officials prompted Interpol, the international criminal information clearinghouse, to issue what is known as a red notice regarding Mr. Ghosn; such notices are issued internationally for people wanted for prosecution or to serve a sentence. But red notices essentially function as a diplomatic request for help, not as an international arrest warrant, and they do not obligate governments to comply.

Mrs. Ghosn has been a vocal defender of her husband. In April, in an interview with The New York Times, she described how the Japanese authorities treated her “like a terrorist” when they arrested him again in April at a home in Tokyo where they were staying while he was free on bail on earlier charges.

On Wednesday, Mr. Ghosn is expected to speak for himself at a news conference in Beirut.

Mrs. Ghosn was formerly involved in the fashion industry, and she was previously married to Marwan Marshi, a banker of Lebanese-Palestinian origin in New York, according to a relative of Mr. Marshi who asked not to be named in order to discuss the couple’s personal life. The couple was involved in philanthropy, and Mrs. Ghosn met Mr. Ghosn at a charity event in New York, according to a friend of Mr. Ghosn who also asked not to be named.

Also on Tuesday, Japan’s land and transportation minister, Kazuyoshi Akaba, said that major airports with terminals for private jets would be required to inspect large baggage items that pass through them. The stepped-up measures followed reports that Mr. Ghosn escaped through Kansai International Airport in Osaka, Japan, while hiding in a large box that was loaded onto a private aircraft.

Japanese officials have also said that they confiscated the 1.5 billion yen, or nearly $14 million, in bail that Mr. Ghosn forfeited when he fled the country.

Last week, MNG Jet, the air charter company that operated the flights that Mr. Ghosn used to leave Japan, brought a criminal complaint against its operations manager, Okan Kosemen. It said Mr. Kosemen had deceived the company after the news broke that Mr. Ghosn had flown on two of the private jets it managed. MNG Jet is a subsidiary of MNG, a large Turkish construction conglomerate.

Mr. Kosemen, who has been detained by the Turkish authorities on charges of falsifying records and transporting an undocumented migrant, arranged the contracts for both flights, according to MNG Jet. A lawyer for Mr. Kosemen, Mehmet Fatih Danaci, said he believed his client was innocent.

Documents made available to The New York Times showed an invoice dated Dec. 24 from MNG Jet to “Al Nitaq Al Akhdhar for General Trade Limited” for “TC-TSR Aviation and Logistic Services” for the price of $175,000. (TC-TSR refers to the Bombardier aircraft that flew Mr. Ghosn to Turkey.) The invoice, which appeared to be signed by Mr. Kosemen, listed Al Nitaq Al Akhdhar as being based in Dubai.

A second document, dated Dec. 26, showed a payment order by Al Nitaq Al Akhdhar to MNG Jet for $175,000. The rest of the money was due upon the completion of the flight.

Efforts to reach Al Nitaq Al Akhdhar were unsuccessful.

A spokesman for MNG said that it did not have access to the contract for the Istanbul-Beirut flight because it was on Mr. Kosemen’s computer, which had been seized by investigators, and that it had not received any payment for it at all.

The spokesman, who asked to remain anonymous citing company protocol, said the company had no contact with Al Nitaq Al Akhdhar.

“This was managed by our rogue employee,” the spokesman wrote in an email.

Mr. Ghosn was first arrested by the Japanese authorities in November 2018 and was ultimately charged with four counts of financial wrongdoing while running the vast automotive empire. Mr. Ghosn has denied the allegations and said he was set up by Nissan executives who feared that he would more closely combine the operations of the major Japanese automaker with its French partner, Renault.

On Tuesday, Nissan broke its silence on Mr. Ghosn’s flight, saying in a statement that an internal investigation had found “numerous acts of misconduct” and that the company would continue to cooperate with the authorities in investigating him.

Nissan kept monitoring Mr. Ghosn even after he was released on bail, the Japanese news media has reported. The reports said that the surveillance stopped shortly before Mr. Ghosn fled.

Junichiro Hironaka, one of Mr. Ghosn’s lawyers in Japan, said he noted that the former Nissan executive was under surveillance and filed a criminal complaint with the police on Dec. 27, without specifying a target of the complaint. In a brief interview, he said he did not know whether his complaint led to the cancellation of the surveillance.

Nissan declined to comment.

Makiko Inoue and Eimi Yamamitsu reported from Tokyo, and Carlotta Gall from Istanbul. Reporting was contributed by Aurelien Breeden and Liz Alderman from Paris; Vivian Yee from Beirut, Lebanon; Motoko Rich from Hong Kong; and Amy Chozick from New York.


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It’s Not Just Software: New Safety Risks Under Scrutiny on Boeing’s 737 Max

Even as Boeing inches closer to getting the 737 Max back in the air, new problems with the plane are emerging that go beyond the software that played a role in two deadly crashes.

As part of the work to return the Max to service, the company and regulators have scrutinized every aspect of the jet, uncovering new potential design flaws.

At the request of the Federal Aviation Administration, Boeing conducted an internal audit in December to determine whether it had accurately assessed the dangers of key systems given new assumptions about how long it might take pilots to respond to emergencies, according to a senior engineer at Boeing and three people familiar with the matter.

Among the most pressing issues discovered were previously unreported concerns with the wiring that helps control the tail of the Max.

The company is looking at whether two bundles of critical wiring are too close together and could cause a short circuit. A short in that area could lead to a crash if pilots did not respond correctly, the people said. Boeing is still trying to determine whether that scenario could actually occur on a flight and, if so, whether it would need to separate the wire bundles in the roughly 800 Max jets that have already been built. The company says that the fix, if needed, is relatively simple.

The company informed the F.A.A. about the potential vulnerability last month, and Boeing’s new chief executive discussed possible changes to the wiring on an internal conference call last week, according to one of the people and the Boeing engineer, who spoke on the condition of anonymity to discuss internal deliberations.

The company may eventually need to look into whether the same problem exists on the 737 NG, the predecessor to the Max. There are currently about 6,800 of those planes in service.

The senior Boeing engineer said that finding such problems and fixing them was not unusual and not particular to the Max or to Boeing.

The emergence of new troubles with the Max threatens to extend a crisis that is consuming one of America’s most influential companies and disrupting the global aviation business. The Max has been grounded since March, after two crashes killed 346 people. The crashes were caused in part by new software on the Max, MCAS, which triggered erroneously and sent the planes into nose dives. Boeing has developed a fix for the software, but it has not yet been approved, and the process of returning the plane to service has taken much longer than Boeing expected.

The Max is Boeing’s most important plane, with about 5,000 ordered by airlines around the world. But as the grounding has dragged on, Boeing said it would temporarily shut down its 737 factory, jolting thousands of suppliers and stoking the concern of President Trump.

Boeing abruptly fired its chief executive late last month after he alienated the F.A.A. and airline customers. His successor is now contending with the fallout, as Boeing’s share price has fallen by 21 percent and the company faces tens of billions of dollars in charges related to the grounding.

Regulators have suggested that the Max could be approved to fly again by the spring, a timetable that could still hold. The company says that even if it needs to fix the wiring issue, it would only take one to two hours per plane to separate the wiring bundles on the Max using a clamp.

“We are working closely with the F.A.A. and other regulators on a robust and thorough certification process to ensure a safe and compliant design,” Gordon Johndroe, a Boeing spokesman, said in a statement. “We identified these issues as part of that rigorous process, and we are working with the F.A.A. to perform the appropriate analysis. It would be premature to speculate as to whether this analysis will lead to any design changes.”

Investigations by international regulators into the cause of the two Max crashes determined that pilots of those flights did not respond as quickly or effectively as Boeing and the F.A.A., using accepted industry standards, presumed they would when designing and evaluating the MCAS software.

So in developing a software update for the Max, Boeing and the F.A.A. recognized that the previous industry assumptions should be changed, and that they needed to consider what would happen if it took crews much longer to act in the face of emergencies.

Using that new set of assumptions about pilot reactions, Boeing discovered that if two wire bundles placed close together toward the rear of the plane caused an electrical short, it could lead to a catastrophic accident. The wiring connects to the motor that controls the stabilizer, the horizontal fin on a plane’s tail, sending signals from the flight control computer that can push the nose down or lift it up.

If pilots did not recognize the problem and quickly take appropriate action, the plane could go into a nose dive, the senior Boeing engineer said. Under those circumstances, a short could bring a plane down in the same way that the MCAS software did on both doomed flights, forcing the stabilizer’s motor to run uncontrollably.

Boeing is still working to determine how likely it is that the wires could actually short circuit. The company does not want to make changes to the plane’s wiring if it doesn’t have to, fearing that additional damage could be done during a repair.

The engines on the Max have also become a focus of scrutiny for regulators. CFM International, the joint venture between General Electric and Safran that manufactures the engines, has told the F.A.A. it discovered a possible weakness in one of the engines’ rotors, which could cause the part to shatter. The likelihood of that failure is remote and regulators aren’t requiring an immediate fix, though they are looking to require that airlines inspect as many Max engines as possible before the plane returns to service, an F.A.A. official said.

Boeing also recently told the F.A.A. that it had discovered a manufacturing problem that left the plane’s engines vulnerable to a lightning strike.

While assembling the Max, workers at Boeing’s Renton, Wash., factory had ground down the outer shell of a panel that sits atop the engine housing in an effort to ensure a better fit into the plane. In doing so, they inadvertently removed the coating that insulates the panel from a lightning strike, taking away a crucial protection for the fuel tank and fuel lines. The F.A.A. is developing a directive that will require the company to restore lightning protection to the engine panel and Boeing is already in the process of resolving the issue.

“The F.A.A. and Boeing are analyzing certain findings from a recent review of the proposed modifications to the Boeing 737 MAX,” an F.A.A. spokesman, Lynn Lunsford, said in a statement. “As part of its continuing oversight, the agency will ensure that all safety-related issues identified during this process are addressed before the aircraft is approved for return to passenger service.”

The new issues pose additional challenges for Boeing’s leadership. Late last month, the company’s board fired the chief executive, Dennis A. Muilenburg. He is being replaced on an interim basis by Greg Smith, the former chief financial officer. Next week, David Calhoun, until recently the nonexecutive chairman of Boeing’s board, will take over as chief executive.

On an internal conference call last Thursday, the question of changing the wiring on the Max came up, according to the senior Boeing engineer and another person familiar with the matter. At one point, a Boeing employee asked about whether the fix would need to be made to every plane in the fleet if the issue was found to be low risk. Mr. Smith replied that if changes were needed, they would have to be comprehensive.

Mr. Smith’s sober response served as an immediate contrast to Mr. Muilenburg, who repeatedly made overly optimistic projections about what was needed to get the Max back into service.

Boeing was already confronting a number of problems with the 737 Max and its predecessor.

In recent simulator tests with crews from American, Southwest and United Airlines as well as Aeromexico, many pilots did not use the prescribed emergency procedures to handle problems with the flights, raising the possibility that regulators could mandate flight simulator training or change the procedures before clearing the plane to fly. The F.A.A. is evaluating Boeing’s analysis of the testing.

Still, there are signs that Boeing is making progress toward getting the Max flying again. Regulators from Europe plan to fly to Seattle this week to test the new software in a flight simulator, a sign that international authorities believe the company is far enough along that its fix is ready for serious evaluation, according to two people familiar with the matter.

Government officials believe that the plane may be cleared for a certification test flight as soon as this month, where the company must demonstrate the plane meets all the safety requirements. The flight — the regulator’s final exam for the Max — is a significant milestone and one of the last hurdles the company needs to clear for regulators to lift the grounding.

American Airlines and Southwest Airlines are currently planning to use the Max for commercial flights in April, while United Airlines has scheduled Max flights for June.

“Our highest priority is ensuring the 737 Max meets all safety and regulatory requirements before it returns to service,” said Mr. Johndroe, the Boeing spokesman.


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No Line to Board Private Jets, but There Is a Line to Buy Them

No lines to check in for your flight, barely any security, certainly no jockeying at the gate waiting for the moment your boarding group is called. It’s a fantasy, perhaps, unless you’re rich enough to be part of the private-jet set.

There’s no denying that flying private is easier, faster and more comfortable than sitting in even the nicest first-class seat, environmental concerns aside. But to have space in a cabin filled with people you picked comes at a steep price — as much as tens of thousands of dollars an hour.

Yet despite the hefty costs, this has been a banner year for private planes.

Sales of business jets were up 15 percent at the end of the third quarter over the same period last year, said the General Aviation Manufacturers Association, the aircraft makers’ trade group. Experts in private aviation said sales of both new and used airplanes were up, driven by an economy that is thriving for the super rich and a huge tax break in the 2017 tax law.

Not to mention the status conveyed by owning a private jet. A recent Vanity Fair piece called private jets “the singular fetish object of the modern billionaire.”

As odd as it may sound, there were even end-of-year deals this season on “white tail” jets, which the makers build without a buyer’s order. But the aviation experts said buyers needed to budget for not just the purchase price but many millions more each year to fly and maintain the plane.

“Throughout the year, some of our most well-heeled clients were in a great position to capitalize on excess inventory,” said Dan Drohan, chief executive of Solairus Aviation. “People are taking advantage of year-end acquisitions of white tails. We’re taking delivery of several in the last five days of the year.”

Deciding whether to buy your own jet requires extensive calculations based on the hours and distance you want to fly as well as the operating costs, which are substantial. The annual operating budget starts at just under $1 million for lighter jets like Embraer’s Phenom 300 and rises to $4 million or more for jets, like the Gulfstream G650 and Bombardier Global 6500, that offer the most flight range, speed and amenities.

Aside from the wow factor, the biggest motivator to buy a jet in the last year has been a tax break in the 2017 overhaul. The break is intended primarily for business expenses. So a private jet owner must use the plane at least 50 percent of the time for business purposes to deduct the entire purchase price of the plane in the first year. Personal use is allowed — as in transporting your family across the country to join you at a meeting — but not entertainment use, as in going to the Super Bowl.

This deduction also applies to used aircraft. “The fact that Trump let you take 100 percent depreciation Year 1, you’re in a $5 million plane for $2.5 million,” said Bill Papariella, chief executive of Jet Edge, a jet charter and management company. “They’re flying off the shelves.”

When the plane is eventually sold, the owner needs to pay income tax on the sale price. And if the owner doesn’t use the plane at least 50 percent of the time for business, the deduction goes away. The lost deduction means a restatement of that year’s tax filing. It could also mean that the value of that plane would be depreciated over a longer period, greatly reducing the tax benefit.

Strict record-keeping becomes essential to preserve a remarkable tax break, said Jerald D. August, tax partner and head of the international tax and wealth planning practice group at Fox Rothschild.

The least expensive way to get onto a private jet is through fractional ownership with companies like NetJets or Flexjet. With that type of ownership, a person buys a portion of an aircraft — in eighths, quarters or halves. Depending on the aircraft, this could translate to about $1 million for a quarter of a jet.

But that doesn’t include flight costs, like fuel and pilot time. Those hourly fees are more expensive than the hourly cost if you operated the plane on your own — sometimes more than double. There are also fractional fees. Of course, you’re sharing the expense of the plane with other owners. The fractional jet company is making a profit as well as taking care of maintenance.

When it comes to buying your own jet, there are a minimum number of flight hours that make it cost efficient. Mr. Drohan said the total was about 150 hours. An aviation lawyer pegged it at 300 or more. The most a jet flies in a year are 1,200 to 1,400 hours.

Mr. Papariella said his company, Jet Edge, worked to charter planes to offset fixed costs to owners, but those savings come at the cost of hours on the plane’s engines. He said the company’s fleet of under 100 jets flew a total of 1,100 hours in September and 1,460 in October.

Charters offer a balance between having more control over when you fly and lowering some of the costs of ownership. Jet Edge’s average client has a minimum net worth of $50 million, which is low in the private jet world.

Mr. Papariella’s clients often look to buy used jets, some decades old, that still perform at a high level but cost less up front, he said. A Gulfstream G4 from 2002 might cost $3 million — far better than $60 million plus for the current G650. But that old Gulfstream still costs $1 million or more a year to operate, he said.

“Even if you’re very wealthy, you could still be shocked by a monthly bill,” he said. “We want to include the owner in how we make money. It’s for guys who are used to having information at their fingertips.”

Still, some buyers don’t want to share.

A lawyer who advises on jet purchases said the plane was just another asset for his billionaire clients. Many of them are happy for the plane to sit idle when they’re not using it, even if it entails paying for a crew to be at the ready.

Management companies like Executive Jet Management, a part of Berkshire Hathaway’s NetJets, and Solairus Aviation focus primarily on managing jets for the owners, which includes negotiating down fixed costs like fuel and pilot training but also ensuring compliance with flight and safety regulations.

“First and foremost, owning an aircraft is a very technical ownership experience,” said Brian Hirsh, president of Executive Jet Management. “Unlike real estate, there’s a lot of regulatory compliance factors to consider like pilot training, standards, certification, aircraft airworthiness. The role of the management company is to make it hassle free.”

EJM, as it is known, charges $5,000 to $20,000 a month for its management services. Additional costs like fuel, pilots and crew are passed through to owners but at discounts achieved by buying alongside NetJets.

“Collectively, we have 766 aircraft, which makes us the fifth-largest airline between United and Southwest,” he said. “We take those discounts and pass them through to owners.”

Mr. Drohan said clients needed to consider the three Ms in buying a jet: mission (where and how they’re flying), means (how much they want to spend) and motivation (which, he said, “is a nice way of saying ego”).

“The last thing I say to people before a purchase is buy the airplane you want,” he said. “You’d be surprised how many people try to talk themselves into something smaller or less expensive.”

The private jet world is the domain of the have-mores and have-the-mosts. But the costs may make that airline premium economy seat more attractive.


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At Boeing, C.E.O.’s Stumbles Deepen a Crisis

In a tense, private meeting last week in Washington, the head of the Federal Aviation Administration reprimanded Boeing’s chief executive for putting pressure on the agency to move faster in approving the return of the company’s 737 Max jet.

This was the first face-to-face encounter between the F.A.A. chief, Stephen Dickson, and the executive, Dennis A. Muilenburg, and Mr. Dickson told him not to ask for any favors during the discussion. He said Boeing should focus on providing all the documents needed to fully describe the plane’s software changes according to two people briefed on the meeting.

It was a rare dressing-down for the leader of one of the world’s biggest companies, and a sign of the deteriorating relationship between Mr. Muilenburg and the regulator that will determine when Boeing’s most important plane will fly again.

The global grounding of the 737 Max has entered its 10th month, after two crashes that killed 346 people, and the most significant crisis in Boeing’s history has no end in sight. Mr. Muilenburg is under immense pressure to achieve two distinct goals. He wants to return the Max to service as soon as possible, relieving the pressure on Boeing, airlines and suppliers. Yet the company and regulators must fix an automated system known as MCAS found to have played a role in both crashes, ensuring the Max is certified safely and transparently. Caught in the middle, Mr. Muilenburg has found himself promising more than he can deliver.

After the crashes, but before the plane was grounded, Mr. Muilenburg called President Trump and expressed confidence in the safety of the Max. He has repeatedly made overly optimistic projections about how quickly the plane would return to service, pushing for speedy approval from regulators. The constantly shifting timeline has created chaos for airlines, which have had to cancel thousands of flights and sacrifice billions of dollars in sales.

In his few public appearances, Mr. Muilenburg’s attempts to offer a sincere apology for the accidents have been clumsy, prolonging Boeing’s reputational pain. His performance has left lawmakers irate. The families of crash victims, convinced the company does not care about their loss, have repeatedly confronted him with posters of the dead.

The missteps led Boeing to one of the most consequential decisions in its 103-year history, when it announced on Monday that it was temporarily shutting down the 737 factory, a move that has already begun rippling through the national economy.

The Max is Boeing’s best seller, with tens of billions of dollars in future sales at stake. Boeing stock has fallen by 22 percent in this crisis, costing the company more than $8 billion and spreading pain throughout a supply chain that extends to 8,000 companies. On Friday, Spirit AeroSystems, which makes the Max fuselage, said it would stop production of the part next month.

“Throughout this process our No. 1 priority has been safety,” Gordon Johndroe, a Boeing spokesman, said in a statement. “We have learned a lot this year and our company is changing.”

Last week, when Mr. Trump called Mr. Muilenburg to discuss Boeing’s problems, the chief executive assured the president that a production shutdown would only be temporary.

But Boeing still faces serious hurdles. The company has not delivered a complete software package to the F.A.A. for approval. In recent simulator tests, pilots did not use the correct emergency procedures, raising new questions about whether regulators will require more extensive training for pilots to fly the plane or whether the procedures needed to be changed, according to two people briefed on the matter.

And on Friday, a new space capsule Boeing designed for NASA failed to reach the correct orbit, another blow to company morale and a setback for the United States space program.

“If it was my call to make, Muilenburg would’ve been fired long ago,” Rep. Peter DeFazio, Democrat of Oregon and the chairman of the House Transportation Committee investigating Boeing, said in an email. “Boeing could send a strong signal that it is truly serious about safety by holding its top decision-maker accountable.”

From the earliest days of the grounding in March, shortly after the crash of Ethiopian Airlines Flight 302 and months after the first Max crash, off Indonesia, Mr. Muilenburg tried to put the episode behind him as swiftly as possible, telling airlines it would last just weeks.

“By the time April rolled around, Boeing was telling us next week, next month,” Gary Kelly, the chief executive of Southwest Airlines, said in an interview. “We were a week away, weeks away, three weeks away.”

That misplaced optimism made it impossible for airlines including Southwest, which is Boeing’s biggest 737 customer, to reliably plan their routes. “It was really creating havoc,” Mr. Kelly said.

In August, regulators from Europe, Canada and Brazil flew to Seattle and joined F.A.A. officials for a meeting with Boeing. They were expecting to review reams of documentation describing the software update for the Max. Instead, the Boeing representatives offered a brief PowerPoint presentation, in line with what they had done in the past. The regulators left the meeting early.

“We were looking for a lot more rigor in the presentation of the materials,” said Earl Lawrence, the head of the F.A.A.’s aircraft certification office. “They were not ready.”

With delays mounting, Mr. Muilenburg missed a chance to smooth things over with key customers. In September, he attended a gathering of a club of aviation executives called Conquistadores del Cielo at a ranch in Wyoming, according to two people familiar with the trip. As the group bonded while throwing knives and drinking beers, Mr. Muilenburg took long bike rides by himself. It was typical behavior for Mr. Muilenburg, an introverted engineer who prefers Diet Mountain Dew to alcohol, but it left other executives baffled.

October brought a string of bad news for Mr. Muilenburg. The board stripped him of his title as chairman, a stinging rebuke of his leadership. The decision, the board said, would allow him to focus on the single most important job at the company: bringing the Max back to service.

About two weeks before Mr. Muilenburg testified in front of Congress for the first time, the company disclosed to lawmakers instant messages from 2016 in which a Boeing pilot complained that the system known as MCAS, which was new to the plane, was acting unpredictably in a flight simulator. Boeing discovered the instant messages in January, but Mr. Muilenburg did not read them at the time, instead telling the company’s legal team to handle them.

The messages included the pilot saying he “basically lied to the regulators (unknowingly).”

When Mr. Dickson learned of the messages in October, he sent a one-paragraph letter to Mr. Muilenburg demanding an explanation for “Boeing’s delay in disclosing the document to its safety regulator.”

Mr. Muilenburg and Mr. Dickson, who took over the F.A.A. this summer, spoke for the first time later that day. Mr. Muilenburg said Boeing hadn’t told the F.A.A. about the messages out of concern that doing so would interfere with a criminal investigation being conducted by the Justice Department, according to two people briefed on the call.

Mr. Dickson said the lack of transparency would only increase the regulator’s scrutiny of the company.

Still, Mr. Muilenburg continued to project confidence, telling investors on an earnings call in October that he expected regulators to begin approving the Max by the end of the year. The company had just fired Kevin McAllister, the chief executive of Boeing’s commercial division who had been overseeing work on the Max.

Despite Mr. Muilenburg’s assurances, airline discontent was growing. The next day, American Airlines joined a chorus of Boeing customers complaining about the growing costs of the Max crisis. Doug Parker, American’s chief executive, said on a call with investors that he was working to “ensure that American is compensated for the lost revenue that the Max grounding has caused, the missed deadlines and extended grounding.”

“We’re working to ensure that Boeing shareholders bear the cost of Boeing’s failures,” Mr. Parker added. “Not American Airlines’ shareholders.”

In two days of congressional hearings at the end of October, Mr. Muilenburg faced withering criticism from lawmakers, who told him to resign or take a pay cut. Mr. Muilenburg said it was up to the board to make decisions about his multimillion-dollar compensation. He invoked his upbringing on an Iowa farm so many times that he elicited jeers from family members of crash victims who were present.

In an interview on CNBC after the hearings, the chairman of Boeing’s board, David Calhoun, said the board was confident in its chief executive.

“From the vantage point of our board, Dennis has done everything right,” Mr. Calhoun said. “If we successfully get from where he started to where we need to end up, I would view that as a very significant milestone and something that speaks to his leadership and his courage and his ability to execute and get us through this.”

Mr. Muilenburg continued to press the F.A.A. In early November, he called Mr. Dickson to ask whether he would consider allowing the company to begin delivering airplanes before they were cleared to fly. The administrator said he would look into it but made no commitments, according to an F.A.A. spokesman.

In an apparent misunderstanding, Mr. Muilenburg took the call as a green light. The next Monday, the company put out a statement saying it could have the plane to customers by the end of the year.

Mr. Dickson told colleagues that he had not agreed to that timeline and felt as though he was being manipulated, according to a person familiar with the matter. That week, he put out a memo and a video urging employees to resist pressure to move quickly on the Max approval.

This month, anxiety levels rose at Boeing’s factory in Renton, Wash. Several key tests had not yet been completed, and European regulators would soon leave work for the holidays and not return until the beginning of January. In calls with F.A.A. officials, Boeing engineers began to float an idea for speeding the process: Perhaps the company should ask the agency to break with its foreign counterparts and approve the Max alone?

The suggestion alarmed some F.A.A. officials, who worried that approving the Max without agreement from other regulators would be untenable, according to two people familiar with the matter. When they called Mr. Dickson to tell him of Boeing’s plans, he balked at the suggestion and eventually the company backed down.

A week later, Mr. Dickson brought Mr. Muilenburg into the agency’s Washington headquarters for their first in-person meeting.

There, Mr. Dickson said he had done the math, and there was no way the Max could fly by the end of the year.

When Mr. Muilenburg brought up the logistics of delivering Max jets to customers, Mr. Dickson would not discuss the issue, two people familiar with the matter said. Boeing’s representatives said they might need to consider temporarily shutting down production. Mr. Dickson told them to do what they needed to do, saying the agency was focused on conducting a thorough review.

Four days later, Boeing announced it would bring the 737 factory to a halt. There was no discussion of removing Mr. Muilenburg as chief executive at last week’s board meeting in Chicago where the shutdown was debated, according to three people briefed on the meeting.

The challenges facing Mr. Muilenburg extend beyond returning the Max to service and the botched space capsule launch on Friday. The F.A.A. is aware of more potentially damaging messages from Boeing employees that the company has not turned over to the agency. Other important planes are behind schedule. New defects have been found on older models of the 737. Boeing lost two major pieces of business to Airbus, its European rival, this month.

“This hasn’t been their best and finest hour,” said Mr. Kelly, the Southwest Airlines chief executive. “There’s mistakes made and they need to address those.”

With the first anniversary of the Ethiopian accident approaching in March, Boeing recently asked a representative for the families of crash victims if it would be appropriate for Mr. Muilenburg to attend the memorial. They said no.

“He is not welcome there,” said Zipporah Kuria, whose father, Joseph Waithaka, was killed in the second crash. “Whenever his name is said, people’s eyes are flooded with tears.”


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After Boeing Halts Max Production, Suppliers Wait for Fallout

Boeing made a decision on Monday that the company had long resisted: to temporarily stop producing its most popular passenger jet, the 737 Max, which has been grounded for nine months in the wake of two crashes that killed 346 people.

The impact of that decision is stretching far beyond Boeing’s headquarters in Chicago and its giant production facility in Renton, Wash., rippling through the worldwide aerospace supply chain from California to Kansas, Britain to France. For Boeing’s vast network of suppliers, the announcement made real what they had dreaded — a suspension of unknown length that could force some of them to scale back production and even lay off workers.

“The uncertainty around the airplane is a challenging thing at the moment,” said Phil Anderson, who runs a small aerospace supplier that has facilities in Wichita, Kan., and depends on the Max for 50 percent of its annual revenue. “All the options are on the table.”

Boeing purchases the parts that go into the Max from 600 companies, including major corporations like General Electric, which supplies engines for the airplanes, and lesser-known manufacturers that specialize in components like lighting systems and seats.

Those manufacturers, many of which depend on Boeing for much of their business, span the world. Safran, a French company that manufactures engines for the Max in partnership with G.E., plans to cut production in response to the suspension, making enough material for 15 planes a month, down from 42.

“We are in a crisis mode,” Philippe Petitcolin, the company’s chief executive, told the French newspaper L’usine nouvelle. “Any day we do nothing now costs us money.”

Boeing is also the largest customer of the aerospace unit of Senior Plc, a British company whose California-based subsidiary makes tubing for the Max. Spirit AeroSystems, an $8 billion company based in Kansas that manufactures the plane’s fuselage, relies on Boeing for 80 percent of its revenue. And the grounding of the Max has strained G.E.’s finances, reducing its cash flow by $400 million per quarter, company officials said in August.

The full reach of Boeing’s production process extends beyond those direct suppliers. A company that produces seating or fuselage for its planes might purchase material from several other companies, resulting in a network of as many as 8,000 suppliers, according to industry experts, though not all of them provide material for the Max. While Boeing is not planning to lay off any of the 12,000 workers building the Max in Renton, employees at some suppliers will likely face salary cuts, furloughs or layoffs.

It remains unclear how exactly the Max suspension will affect each company in that network. Boeing announced that the suspension would begin in January but did not say how long it would last. And the company plans to continue buying parts from some major suppliers, though probably at a reduced rate. A Boeing spokesman said the company was reviewing how much support it would provide to individual contractors on a case-by-case basis.

“People don’t know what staff to keep on — how many do I need to hire, do I need to think about firing people, how do I think about retention,” said Carter Copeland, an aerospace expert at Melius Research. “It’s a series of equations that each individual company is trying to manage.”

For the most part, aerospace experts say, major suppliers that manufacture materials for other companies in addition to Boeing should be equipped to weather the suspension, while smaller operations with fewer customers will struggle. But a halt to production that lasts longer than a month could put even those larger companies in peril.

“If it goes two or three, this is going to hurt like hell,” said Paul Weisbrich, an investment banker at D.A. Davidson & Co. who specializes in the aerospace industry. “There will be layoffs, there will be people put on the street.”

Boeing has already announced more than $8 billion in charges related to the Max crisis, a figure that is expected to rise significantly. And in many ways, halting production of the plane makes financial sense for the company as it awaits clearance from regulators to get it back in the air.

The current production rate costs Boeing about $2 billion a month, according to a J.P. Morgan report. The halt will bring those costs down, the report said, though the company will likely continue to burn around $1 billion per month.

This is not the first time that the uncertain status of the Max has disrupted Boeing’s suppliers.

The company said in April that it would slow production of the Max from 52 airplanes a month to 42. In response, the chief executive of Spirit AeroSystems, Tom Gentile, told investors the company would freeze some hiring, reduce overtime and decrease its use of contractors. And in June, Spirit moved about 6,000 employees in Kansas and Oklahoma to a four-day workweek, resulting in a 20 percent pay cut that lasted until the end of August.

“Everybody weathered the storm pretty successfully, but it’s still a loss that won’t be recouped,” said B.J. Moore, a regional director for the Society of Professional Engineering Employees in Aerospace, a union that represents workers at Spirit.

Mr. Moore said Spirit had not told employees how it would respond to Boeing’s decision to suspend production of the Max. A spokeswoman said the company was “working closely with our customer to determine what that means for Spirit.”

Just as aerospace parts flow from one supplier to the next, so too do the crucial decisions about how to manage a break in production. Mr. Anderson’s company, HM Dunn AeroSystems, supplies metal structures that go into the fuselage that Spirit sells to Boeing. A team of around 50 workers produce parts designed for the Max, and Mr. Anderson said he was waiting to hear from Spirit before he decided how to deploy that work force in the coming weeks.

“When they determine their course of action, they’ll bring in their supply chain, and we’ll talk about how we manage it together,” Mr. Anderson said. “We’ll contemplate furloughs, we’ll consider shortened workweeks.”

Many Boeing suppliers have been preparing for this moment for months. Mr. Anderson said he started mapping out possible adjustments to the production process as early as April. At the Paris Air Show in June, the president of G.E.’s aviation division, David Joyce, said the company “modeled four, five scenarios literally a week,” according to The Wall Street Journal.

Still, while the stakes are high for Boeing and its suppliers, the broader economic impact of the suspension is likely to be limited.

“It might shave a tenth or two of G.D.P. growth because of the lost production,” said Mark Zandi, chief economist at Moody’s Analytics. “But in the grand scheme of things it’s not going to change the trajectory of the economy.”

Some Boeing suppliers said that the suspension of Max production would not have a major effect on their bottom lines. A spokesman for Honeywell, which provides weather radars and cockpit advisory systems to Boeing, said the company did not expect “a significant financial impact” from the grounding of the Max.

Senior Plc, the British manufacturer, did not respond to a request for comment. A G.E. spokeswoman said the company was working to mitigate the impact of the suspension while “protecting the company’s ability to accelerate production as needed in the future.”

With the exact terms of the suspension still unclear, many factory workers and suppliers are simply waiting to learn more. “Right now, everyone’s in that mode of getting through the holiday and seeing what’s on line in 2020,” said Mr. Moore, the union official. “Until you find out, nobody knows.”

Natalie Kitroeff, David Gelles and Mélissa Godin contributed reporting.


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Boeing to Temporarily Shut Down 737 Max Production

Boeing next month will temporarily stop making the 737 Max, its most popular passenger jet, the company said on Monday.

The decision, after a two-day board meeting, is the culmination of the worst crisis in the company’s 103-year history and follows two crashes that killed 346 people. Boeing had repeatedly signaled that the plane would be cleared to return to the sky before the end of the year.

Boeing’s decision could ripple through the American economy. The company is America’s largest manufacturing exporter and it views the 737 Max as critical to its future.

This new model of its workhorse 737 was begun under pressure in 2011 as the company sought to fend off competition from its European rival, Airbus. But after the two crashes, prosecutors, regulators and two congressional committees are investigating whether Boeing overlooked safety risks and played down the need for pilot training in its effort to design, produce and certify the plane as quickly as possible.

One focus for investigators is a software system known as MCAS, which was created for the Max and was found to have played a role in both crashes. Shortly after the first crash, off the coast of Indonesia in October 2018, Boeing promised a fix to MCAS. Then the second crash happened in March, in Ethiopia.

The plane was grounded days later, and Boeing has still not delivered a software fix for MCAS that has met federal approval. And there is still no timeline for the plane’s return to the air.

Boeing’s reputation and stock price have been battered, with shares in the company falling 25 percent since March. The company has already announced more than $8 billion in charges related to the crisis, a figure that is expected to rise significantly.

With the company still unable to win approval from global regulators to let the plane fly again, executives and board members have made, in halting production, one of the most consequential decisions in the manufacturer’s history, one that will also affect its hundreds of suppliers around the country.

Shutting down the factory “emphasizes the uncertainty of getting Max back in the air,” Jonathan Raviv, an analyst at Citi, wrote in a note on Monday.

Boeing has only rarely stopped production of its airplanes, most recently in 2008. But the company has never faced a situation like the one it now confronts. Boeing has sold roughly 5,000 of the jets, making it the best-selling aircraft in its history, and it has built nearly 400 Max jets that it has not yet delivered.

“It will have enormous ripple effects,” said Susan Houseman, director of research for the Upjohn Institute for Employment Research. “It will have very real effects on many people’s lives, and it’s never good for this to happen right before the holidays.”

Boeing said it intended to redeploy the roughly 12,000 workers building the Max in its factory in Renton, Wash., to other projects, avoiding layoffs or furloughs for the time being.

It will try to manage the disruption to suppliers, though it did not give details. It may continue to accept parts from major suppliers, so that when the company restarts the Max line production can be quickly ramped up. Other suppliers are likely to endure significant financial pain if Boeing’s shutdown halts part of their assembly line for a period of months.

“Our objective continues to be ensuring supply chain health and production system stability, including the preparedness for seamless transition in the future,” a Boeing spokesman, Gordon Johndroe, said in a statement.

Boeing’s shares were down more than 4 percent before the announcement. Shares of Spirit AeroSystems, which makes the fuselage of the Max, fell nearly 2 percent on Monday.

But because Boeing is not planning significant layoffs and its suppliers are distributed around the country, the overall effect on the broader economy will depend on how long the stoppage lasts.

“It’s a blow to the collective psyche,” said Mark Zandi, chief economist at Moody’s Analytics. “But the American economy is performing well, job growth is strong, and the stock market is near a record high. If there was a time when the economy could digest something like this, it is now.”

Boeing had already slowed production at the factory after the crashes. In April, the company said it would reduce the number of 737 planes it produced each month to 42 from 52.

It was not clear how long the Max factory will be shut down. Boeing continues to encounter hurdles with the Federal Aviation Administration and other global regulators as it works to return the plane to service.

The delays have varied from the technical to the procedural, and have now made it likely that the Max will be grounded for a full year, if not longer. Boeing has still not completed all the steps necessary to satisfy regulators.

As a result, Boeing has repeatedly pushed back the projected date of a return to service for the Max. Dennis A. Muilenburg, Boeing’s chief executive, said in October that he expected the planes to be approved to fly this year. But last week, Stephen Dickson, the administrator of the F.A.A., said the Max would not fly until 2020.

Southwest Airlines and United Airlines had already postponed Max flights until March, while American Airlines has said it won’t fly the Max until April.

The production shutdown adds to the pressure facing Mr. Muilenburg. Among his challenges: the company’s fraying relationship with the F.A.A., which has become more willing to openly question Boeing in recent weeks.

In a meeting at F.A.A. headquarters in Washington last week, Mr. Dickson told Mr. Muilenburg that it would be impossible to get the plane flying by the end of the year, despite Boeing’s previously rosy predictions.

“Boeing continues to pursue a return-to-service schedule that is not realistic,” an F.A.A. official wrote in an email to Congress before the meeting. “More concerning, the administrator wants to directly address the perception that some of Boeing’s public statements have been designed to force F.A.A. into taking quicker action.”

The board stripped Mr. Muilenburg of his title as chairman in October, saying the move would allow him “to focus full time on running the company as it works to return the 737 MAX safely to service.” David Calhoun, who became chairman of the board, has expressed confidence in Mr. Muilenburg.

But in an interview on CNBC last month, Mr. Calhoun did not offer a clear answer when asked whether the company would keep Mr. Muilenburg in his role as chief executive after the Max returned to service.

“Why speculate on that?” Mr. Calhoun said in the interview. “If we successfully get from where he started to where we need to end up, I would view that as a very significant milestone and something that speaks to his leadership and his courage and his ability to execute and get us through this.”

Mr. Calhoun added that “the board deliberates, every single meeting, on the subject of our leaders and how well they’re doing, and do they have our confidence.”

Boeing’s board was in Chicago on Monday as the company decided between reducing Max production or temporarily halting it. Though shutting down the line rather than further reducing the rate of production is a drastic step, it could help the company in some ways.

The process of delivering the Max jets it has already built but not delivered will take at least a year, and reducing the backlog would simplify that process. It would also reduce the time the newly built planes sit idle.

But the task of delivering its growing backlog was made more complicated last month, when the F.A.A. took control of issuing certificates of airworthiness for each airplane. That decision means Boeing won’t be able to deliver planes as quickly as it had hoped.

Boeing first suggested it might halt production of the Max in July. Last week, Boeing reached a partial settlement with Southwest Airlines to compensate it for some of the costs it has incurred as a result of the protracted grounding of the Max.

“Boeing still has credit lines and probably the ability to incur new debt,” said Scott Hamilton, managing director of the Leeham Company, an aviation consultancy. “Even so, at some point, Boeing — even with its financial resources — has to stop the cash bleeding.”

At the very moment Boeing announced it was ceasing production of its most important product, the company took steps to meet Wall Street’s expectations. As it announced the shutdown on Monday, it sent a simultaneous news release announcing a regular quarterly dividend for shareholders.


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