Indonesia To Blame Boeing 737 MAX Design For Lion Air Crash In Upcoming Report

Indonesian investigators are expected to release a formal report in October, criticizing Boeing's design flaws in the 737 MAX aircraft for the fatal crash of a Lion Air 737 MAX that killed all 189 people on board last October, reported The Wall Street Journal.

Sources told WSJ that the Indonesian report's draft conclusions would be the first formal government report that outlines defects in the plane's design, also identifies a series of pilot errors and maintenance problems that contributed to the crash. 

The malfunctioning Maneuvering Characteristics Augmentation System (MCAS) system is expected to be highlighted in the report next month as a significant cause of the Lion Air crash. 

And in a fatal crash in March, an Ethiopian Airline 737 MAX aircraft experienced similar failures of the MCAS software during a sudden plunge that took 346 lives, prompted Boeing to ground all 737 MAX aircraft across the world, now six months and counting. 

Indonesian investigators declined to comment on the upcoming report, except to say the final report will be released in the first week of November. 

The report has already been reviewed by Boeing, Lion Air, and the US Federal Aviation Administration (FAA). 

Soerjanto Tjahjono, the head of Indonesia's transport safety committee, told Reuters that stakeholders have already received the report and are currently evaluating it.  

The US National Transportation Safety Board (NTSB) is expected to publish a series of safety recommendations in the coming weeks, from improving pilots' manual flying skills to ensuring more transparency during the evaluation of new aircraft designs. 

"The goal is to ensure pilot proficiency when automated systems are malfunctioning or turned off, to help ensure appropriate responses to contradictory cockpit warnings such as those that occurred prior to the MAX crashes, the officials said. The board also is expected to emphasize the importance of setting priorities when executing emergency checklists," WSJ said.

The Justice Department recently opened a criminal probe into the Federal Aviation Administration's (FAA) 2017 approval of MCAS. Earlier this month, a Senate appropriations subcommittee supported new legislation that would require FAA officials "to address recommendations from ongoing investigations and audits," WSJ said. 

There is no firm timetable for allowing 737 MAX jets to fly again.

Boeing is working with US and foreign officials to return the MAX to the air in the coming months, but new reports from several airliners have said timetables could be mid-1Q20 - but really nobody knows. 

The Indonesian report "is expected to list more than 100 elements of the crash chronology," sources told WSJ, adding that some of the points are expected to "refer to missteps by pilots and mechanics (MCAS) initially revealed last year in Indonesia's preliminary report." 

And with Boeing trading at the 378-handle, about -14% from the ATH that was seen in late February, right before the Ethiopian Airline crash in March, it's likely that the upcoming report could add some downward pressure on the equity - as there's no clear timetable to get the 737 MAX back in the air. Any further delay would be disastrous for Boeing.