Employees work on Boeing 737 MAX airplanes at the Boeing Renton Factory in Renton, Washington on March 27, 2019.
Jason Redmond | AFP | Getty Images
The acting head of the Federal Aviation Administration told lawmakers Wednesday that Boeing should have given pilots more information about a new anti-stall system that is suspected in two deadly crashes of the 737 Max since October.
“I, as a pilot, when I first heard about this, I thought there should have been more text in the manual” about the MCAS anti-stall system Boeing added to the planes before they were delivered to customers, Daniel Elwell, the FAA’s acting administrator, told a House aviation subcommittee.
The fast-selling 737 Max has been grounded worldwide after the second crash, in Ethiopia in March. The first crash, in October, happened in Indonesia. The crashes killed 346 people.
Investigators have pointed to erroneous sensor data that fed into the planes’ new, automated anti-stall system in the crashes shortly after takeoff in both deadly flights. Some pilots complained that they weren’t aware the MCAS system existed on the planes until after the crash of the Lion Air flight in Indonesia.
Audio surfaced this week of a tense meeting in November in which airline pilots confronted a Boeing executive after the Lion Air crash, angry that they weren’t informed about the system. Boeing vice president Mike Sinnett reportedly told the pilots “In a million miles you’re going to maybe fly this airplane, maybe once you’re going to see this ever,” according to a report in The New York Times.
The FAA is facing several investigations about its role in approving the new planes in 2017 as well as heightened scrutiny of its practice of using company employees to help certify the aircraft before the planes are delivered to airlines.
Elwell also said Boeing engineers discovered a problem with displays that show if sensors on the plane were giving bad information, but the FAA didn’t find out about it for more than a year. The sensors in question transmit what is known as the angle of attack — the angle of the aircraft relative to oncoming air.
“I am not happy with 13-month gap” between the discovery by Boeing and when the FAA and customers found out, Elwell said. He added that the displays are not critical to flight safety and that the agency welcomes scrutiny and has room to improve. Boeing did not immediately respond to a request for comment.
Some lawmakers criticized the FAA for its oversight and questioned its longtime practice of using manufacturers own employees to help speed aircraft certification.
“The FAA needs to fix its credibility problem,” Rep. Rick Larsen, D-Wash., and chairman of the subcommittee on aviation, said in prepared remarks.
Rep. Peter DeFazio, D-Ore., said “Boeing is yet to provide a single document” to the House panel about the plane.
Boeing is working on a fix for the planes that would give pilots more control over the system and use data from two, instead of one sensor, but the grounding has already pinched some airlines’ revenue and is threatening to crimp sales further if the planes remain off limits during the peak summer travel season.
“If the public doesn’t feel safe about flying then they won’t fly,” Larsen said.
Elwell said the FAA will allow the planes to fly again once it’s “absolutely safe to do so. … It’s important we get this right.”
Also Wednesday, the Senate Committee on Commerce, Science and Transportation is holding a nomination hearing for President Donald Trump‘s pick to run the FAA, former Delta Air Lines executive Stephen Dickson.
US-China trade, oil, currencies in focus
Stocks in Asia Pacific were set to trade mixed on Wednesday following developments on the U.S.-China trade front.
Futures pointed to a higher open for the Nikkei 225 in Japan, with the Nikkei futures contract in Chicago at 21,680, as compared to the index’s last close at 21,620.88.
Shares in Australia, on the other hand, were set to see opening declines. The SPI futures contract was at 6,691.0, as compared to the S&P/ASX 200’s last close at 6,724.60.
In corporate news, Japan’s Mitsubishi Motor is set to release its earnings for the first quarter later on Wednesday.
Overnight on Wall Street, the Dow Jones Industrial Average closed 177.29 points higher at 27,349.19, while the S&P 500 also gained 0.7% to finish its trading day at 3,005.47. The Nasdaq Composite added 0.6% to close at 8,251.40.
On the trade front, in-person trade negotiations between the U.S. and China will begin next week, sources told CNBC. They said White House officials are looking at a longer-term timeline.
Meanwhile, Boris Johnson is set to be the U.K.’s next prime minister after winning the ruling Conservative Party’s leadership race on Tuesday. Johnson has previously stated that the U.K. must leave the European Union by the October 31 deadline “do or die, come what may.”
The British pound last stood at $1.2432, after seeing a high of $1.248 yesterday.
“In our view, Johnson’s desire to push for Brexit, deal or no deal, increases the chance of an early general election and some possibly nasty GBP outcomes,” Rodrigo Catril, senior foreign exchange strategist at National Australia Bank, wrote in a note.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.705 rising from levels below 97.5 yesterday.
The Japanese yen, widely viewed as a safe-haven currency, traded at 108.20 after weakening from levels below 108.0 yesterday. The Australian dollar was at $0.6993 after declining from levels above $0.702 in the previous session.
Here’s a look at some of the data set to be released in the day ahead:
- Hong Kong: NagaCorp earnings
- Japan: Leading index at 1:00 p.m. HK/SIN, Line earnings for the second quarter, Mitsubishi Motor earnings for the first quarter
— CNBC’s Fred Imbert contributed to this report.
Snap earnings Q2 2019
Snap shares surged more than 12% in after-hours trading on Tuesday after the app developer reported quarterly results that soared past analysts’ estimates.
The company, which is the maker of Snapchat, posted a slimmer-than-expected loss for the second quarter while exceeding expectations for user growth and revenue.
- Loss per share: 6 cents vs. 10 cents forecast by Refinitiv
- Revenue: $388 million vs. $359.7 million forecast by Refinitiv
- Global daily active users (DAUs): 203 million vs. 192.4 million forecast by FactSet
- ARPU: $1.91 vs. 1.84 forecast by Refinitiv
“The growth in our community, engagement, and revenue is the result of several transitions we completed over the past 18 months,” said Snap CEO Evan Spiegel in a statement. “We look forward to building on our momentum and making significant ongoing progress in each of these areas.”
Snap’s user base grew to 203 million daily active users. This was the second quarter in a row of growth for the company, which saw its user base shrink from 191 million daily users in the first quarter of 2018 to 188 million the following quarter.
The company reported revenue of $388 million for the second quarter, up 48% compared to a year prior. Notably, the company reported a gross margin of 46%, a vast increase from the 30% gross margin reported a year prior.
“We continue to make significant progress in driving down our underlying unit costs over time, including the cost to deliver a Snap, the cost to deliver an impression, and other key drivers of infrastructure costs,” said Snap Chief Financial Officer Derek Andersen in his prepared remarks.
After a rough 2018, Snap has bounced back in 2019. Its shares have rocketed more than 180% since hitting a record low of $4.99 on Dec. 21.
The stock climbed past $16.50 after the report. Should Snap’s stock open at this price on Wednesday it would be the highest since March 2018. The stock debuted at $17 in 2017.
The company said it expects third-quarter revenue of $410 million to $435 million, which is better than analysts expected. Snap also said it expects between 205 and 207 million daily users for the third quarter, ahead of the 195.5 million analysts expected, according to FactSet.
Snap’s turnaround has been driven by CEO Evan Spiegel’s decision to stop trying to attract all users and instead focus on the company’s core base of younger consumers. Advertisers have flocked to Snap largely because of its augmented reality technology, which has led to improved engagement with users by letting them experiment with selfies and group photos.
In 2019, Snap replicated the past success of its puppy face and rainbow lenses with a gender swap lens that showed users what they’d look like as a person of the opposite sex and a baby face lens that showed them as babies.
“The popularity of these Lenses drew millions of people into our rebuilt Android application, where they experienced the new and improved Snapchat that led to increased engagement,” Spiegel said in his prepared remarks to investors. “The enhancements we have made to our advertising business and self-serve platform meant that we were better able to monetize this increased engagement, leading to accelerating revenue growth.”
NSA says election trolls gaining traction
Nation-states are still active on social media and working to influence public opinion and create rancor, even as companies like Facebook and Twitter have tried to put controls on foreign trolls, said Anne Neuberger, lead investigator on election fraud for the National Security Agency on Tuesday.
Neuberger, speaking at the International Conference on Cybersecurity in New York said the continued increase in availability of cryptocurrencies combined with the emergence of comprehensive social media “influence packages” have given foreign actors new avenues of influence on popular platforms. Neuberger was also named to lead a new cybersecurity directorate established at the NSA on Tuesday.
The specifics on many social media influence packages are often hazy but they can include mentions by high-ranked influencers or the ability to purchase large numbers of fake followers.
Neuberger said the NSA has observed that “foreign adversaries” are today, like prior to 2016, “more focused on driving divisive issues, including inciting people against one another,” both at in-person events and online. Today’s trolls have similar goals to past ones, namely “Making people in a democratic nation question whether democracy is the best way” forward.
The NSA is taking a three-part approach to handling the continued onslaught of elections interference in advance of 2020. Neuberger said the NSA is doing the following:
- Ensuring the NSA maintains insights into attempts to influence upcoming elections, including partnerships with other countries that may be similarly effected.
- Finding new, better or more creative ways to share classified information with state and local entities, as well as technology companies that are involved in elections.
- Working with the FBI, on the influence side, to continue enforcing integrity of elections.
For 2020, Neuberger also said that while the cybersecurity agencies within the federal government are focused on election security, “a big part of that integrity is that each American … is ensuring we educate ourselves, and being aware of what we read online.”
On the voting equipment side, Chris Wlaschin, vice president of systems security for Election Systems & Software, one of the nation’s largest manufacturers of voting equipment, said his company and others have been working closely with the Department of Homeland Security and intelligence agencies to ready for upcoming elections.
He said the diversity of voting equipment throughout the country, given each state’s independence in making purchasing decisions and selecting equipment and methods, is a strength. That’s because the equipment is not interconnected, Wlaschin said, and elections systems today are unable to connect to the wider internet.
Wlaschin also said that he expects mobile voting technology to be adopted in the near future for states that are demanding the option, and that developers are focusing on security of this new technology. “We are working hard to support that,” he said.
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