Ed Butowsky, top wealth manager in Dallas and managing partner of Chapwood Investments, LLC, discusses the trouble Boeing may be facing with such disasters with the 737 max 8.
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Speaker 1: 00:06 In focus. The European Union has now joined the growing list of countries to ground the Boeing 737 Max 8 aircraft. That means roughly two thirds of the 737 Max 8 fleet around the world has been pulled from you since the Ethiopian Airlines crash on Sunday. That killed 157 people, but the Trump administration and the US Federal Aviation Authority administration, while they are standing behind Boeing correspondent Zachary Quiche passed the story.
Zachary Case: 00:32 US investigators are in Ethiopia literally searching through the pieces. 157 dead, including eight Americans when that Boeing 737 Max 8 crash. Just minutes after takeoff, investigators hope the black box will reveal what happened inside the cockpit and help inform safety guidelines for the rest of the fleet. The European Union is the latest group of nations to ground the jets. Witnesses described seeing smoke from the rear of the plane before it crashed, both before and after the plane disappeared from radar. The passenger plane never rising above 1200 feet off the ground, but here in the US, the response is split. The union representing southwest pilots saying they fully support decision to continue flying the 737 Max 8. Meanwhile, the union representing American airline flight attendant is calling for Americans CEO Doug Parker to strongly consider grounding their fleet of Boeing 737 Max 8 jets until a thorough investigation can be performed. The con some lawmakers on Capitol Hill are calling for all Boeing 737 Max 8 aircraft to be grounded.
Speaker 3: 01:40 737 Max 8 should be immediately grounded until the FAA can assure us that they are safe.
Zachary Case: 01:49 Well, others like Republican Lindsey Graham take a different position.
(R) Lindsey Graham: 01:53 I’ll leave that to the FAA people, leave it up to the experts
Speaker 1: 02:01 and that was Zachary Case reporting. There are some indications that the Federal Aviation Administration is reluctant to ground the fleet until they have some analysis of the flight. Data recorder is the so called black boxes. Let’s discuss all this with Keith Mackey aviation expert and owner of Mackie international and Ed Butowsky, managing partner at Chapwood Investments. Keith, if the FAA is waiting for the flight data recorder analysis, if it does show that the pilots were struggling with the aircraft controls from the beginning, they will wait much longer to ground the 737 Max 8, will they?
Keith Mackey: 02:30 Well, it depends why they struggling. What are the controls? Uh, what was the case of the autopilot malfunctioning? I, all I had to do was turn it off and they failed to do that because a lot of third world countries depend on the auto pilot to fly the airplane all the time. So something simple like that. No, there’d be no reason to ground the airplane. Currently the FAA has no reason to ground the airplane. There’s nothing wrong with the airplane and that we know of at the present time.
Speaker 1: 03:00 So Ed as far as, uh, the impact I’d been on Boeing though, I mean with all these countries around the world, thinking that for now, out of an abundance of caution, let’s ground the aircraft. Boeing is one of the biggest manufacturers in the United States. 150,000 employees, $100 billion a year in annual revenue. How much of an impact is this having on Boeing’s bottom line?
Ed Butowsky: 03:20 Well, it’s having quite an impact in, and by the way, I find it funny, I’d rather them ground the airline, look at the black box and then tell me it’s safe versus let’s fly until we look at the black box. I mean I’m not getting on one of those 737’s right now. Um, but in terms of the economics, it is very hurtful for Boeing. Let’s remember it’s, it’s a big company. The stock was down quite a bit on the Dow itself today there’s about 170 points down on the Dow Jones. The way it works is that for if you’re a company, on the Dow Jones, um, one point move is seven and a half points in the Dow world. So you take 24, cause that’s what it was down today, 24 points times seven, you about 160, 170 points down on the Dow Jones. That is a big number. It didn’t take the stock down dramatically. But I’ll tell you right now that if you hear about that black box and you hear about some of these really bad outcomes that could happen. You’re going to see that stock continued to go down and you’re going to see planes cancelled. That’s another really important parts of this. David said, plane orders are going to be canceled by other countries because there’s economic weakness and they’re going to take this as an opportunity to cancel some of those. So start watching for those headlines.
Speaker 1: 04:34 I want to ask you both about something president Trump tweeted about today regarding the crash. He said on Twitter, quote, airplanes are becoming far too complex to fly. Pilots are no longer needed but rather computer scientists from MIT. I see it all the time and many products always thinking to go one unnecessary step further when often old and simpler is far better. At first your reaction,
Ed Butowsky: 04:58 I don’t know why he’s making those comments. Let’s just leave it at that. You know, leave it to the experts, the professionals to figure this out. They might be complex. You know what? If I get on a plane, I don’t want to, I don’t want anybody to have an excuse as to why something goes wrong. I want that plane to take off and land safely. And I don’t know why the president says, you know, jumping into this discussion at all,
Speaker 1: 05:19 Keith, is there any issue of complexity with these aircraft that may have been involved in this?
Keith Mackey: 05:24 Well, when the airplane first came out 50 years ago, there was hardly any automation. Ahmet you slow it by hand and pilots that flew over to have a great deal of experience. They flew it very well and that was the backup. You can always revert to manual control. As the airplane became, uh, developed and more systems were added, more computers were avid, the airplane became more complex. And uh, some of the pilots never got the basic flying skills. So when things go wrong, they have to depend on the automation and the automation doesn’t work anymore. The basic flying skills aren’t there. And that’s what’s lacking.
Speaker 1: 06:06 And can you appreciate why, at least in the United States, a lot of pilots and a lot of airlines might say, look, it’s not our fault that there’s better training on these systems and they have in Ethiopia. So why should we punish the flights here in the United States for problems that exist with the pilots over there?
Ed Butowsky: 06:22 Well, I can, I mean at the same time I think everybody should be concerned. They said that there was smoke coming out of the tail. I don’t know if that’s a pilot error, if there’s a plain error. I mean we just need clarity and right now it’s just guessing. I believe our pilots are well trained. I believe they know how to fly these planes. These are not complicated airplanes from what I’ve learned, uh, to fly. But there’s something not right. And until we know what that is, let’s not let that plane take off.
Speaker 1: 06:49 And Keith, how bad it, I mean, can you understand then why in countries around the world might say, look out of an abundance of caution until we have a better sense of the flight data recorders? You look, it’s if it’s, if it’s just a couple of days in which the flights or grounded or a couple of weeks until there’s some sort of software package, so be it. Can you understand why the rest of the world is taking that attitude?
Keith Mackey: 07:08 I can and I can also understand why many pilots have no problem. And flying the airplane, it’s been around since 2017 it’s flown thousands and thousands of hours. The Ethiopian situation, the copilot had 200 hours of total flight experience. He should never have been on that airplane. If it was a u s airline, the most inexperienced pile to get hired by the airline would have to have 1500 hours. So we’re looking at apples and oranges here. Uh, if the airplane said American Airlines or Southwest Airlines, I’m at, I wouldn’t hesitate to get on it.
Speaker 1: 07:47 Keith backing it and we’ll give you the final word. Go ahead.
Ed Butowsky: 07:50 I just got to say, you know, you say you’re looking at apples and oranges. I’m looking at 157 dead people and until we get a good answer, uh, those planes should be on the ground until we get a fix.
Speaker 1: 08:01 Ed Butowsky and Keith medical. Thank you both. Thank you both. So much luck. We hope that when the flight data recorders or are analyzed the next couple of days, they showed that there was no problem with Boeing, but hopefully we will find out very soon. We thank you both for joining us tonight.