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Boeing 737 Max In Trouble Again As US Regulator Discovers New Flaw

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A potential flaw in the yet-to-be relaunched Boeing 737 Max has been identified by the Federal Aviation Administration (FAA), the USA’s flight regulation body.

The aircraft was grounded by regulators and airlines across the world, after a second crash involving the model in March 2019 which killed Canadian-based Nigerian professor, Pius Adesanmi.

The FAA, which was one of the last to ground the 737 Max model, said in a tweet that it uncovered a ‘potential risk’ during a simulation test.

“On the most recent issue, the FAA’s process is designed to discover and highlight potential risks. The FAA recently found a potential risk that Boeing must mitigate,” the tweet said without giving substantial detail.

A source, however, told the BBC, “During simulator testing last week at Boeing, FAA test pilots discovered an issue that affected their ability to quickly and easily follow the required recovery procedures for runaway stabilizer trim (that is, to stop stabilizers on the aircraft’s tail moving uncontrollably).”

Preliminary reports from the two crashes revealed that software in the plane’s control system forced the craft downward despite the best effort of the pilots to gain altitude. In responding to the hesitant directive of the FAA that all 371 737 Max crafts currently in operation be grounded, Boeing had said, “Boeing continues to have full confidence in the safety of the 737 MAX. However, after consultation with the U.S. Federal Aviation Administration (FAA), the U.S. National Transportation Safety Board (NTSB), and aviation authorities and its customers around the world, Boeing has determined — out of an abundance of caution and in order to reassure the flying public of the aircraft’s safety, to recommend to the FAA the temporary suspension of operations of the entire global fleet of 371 737 MAX aircraft.”

An FAA approval for the recommencement of flying the fated model was slated for late June with tests flights expected in July.

This was however pushed to later in the year. With the new ‘potential risk,’ it is no longer certain if the 737 Max craft will lift off a runway in 2019.

Experts have identified a software glitch and poor documentation as the twin engines that powered down the aircraft. A third, however, is the promptness of the FAA to certify the craft without checking out for these errors, considering that a similar documentation mistake had been made with the McDonnell Douglas MD-11, which first flew in 1990, as well as its resistance to ground the craft after the whole world had done so. Boeing had received over 5,000orders after it launched the 737 Max.

It had procured exoskeleton suits to keep its workers working for longer hours, in order to meet up with demand and gain more market share over its perennial rival, Airbus.

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  1. Wasiu Adewale

    June 28, 2019 at 12:55 am

    May God help our youths from this Efcc

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NSE: Investors Net Worth Drops By N110 Billion

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The Nigerian equities market opened trading for the week on Monday on a negative mood with the market indicators shedding 0.79 percent.

Specifically, the market capitalization shed N110 billion or 0.79 percent to close at N13.812 trillion compared with N13.922 trillion achieved on Friday.

Also, the All-Share Index which opened at 28,566.79 dipped 225.76 points or 0.79 percent to close at 28,341.03, following price loses.

Investors traded 175.168 million shares worth N2.144 billion in 3111 deals against 100.373 million shares valued at N1.459 billion exchanged hands the previous day in 2,707 deals.

A breakdown of the price movement chart indicates that Total recorded the highest loss to lead the losers’ chart with N10 to close at N130 per share.

Dangote Cement trailed with a loss of N3 to close at N170, while Guaranty Trust Bank dipped by 90k to close at N29 per share.

MTN Nigeria Communications decreased by 65k to close at N129, while Eterna was down by 25k to close at N3.40 per share.

Conversely, Nestle led the gainers’ table, increasing by N3 to close at N1,228 per share.

Nigerian Breweries followed with a gain of 50k to close at N58.50, while Conoil appreciated by 40k to close at N20.40 per share.

Vitafoam added 16k to close at N3.70, while Dangote Flour gained 10k to close at N17.50 per share.

In spite of the drop in market indices, the volume of shares traded closed higher as investors bought and sold 175.17 million shares valued at N2.14 billion in 3,111 deals.

This was in contrast with a turnover of 100.37 million shares worth N1.46 billion traded in 2,707 deals on Friday.

Wapic Insurance was the toast of investors for the day, exchanging 42.03 million shares valued at N16.81 million.

United Bank for Africa followed with an account of 24.24 million shares worth N141.95 million, while Guaranty Trust Bank sold 16.04 million shares valued at N478.82 million.

Lasaco Insurance traded 15.11 million shares worth N4.68 million, while Transcorp accounted for 14.61 million shares valued at N15.02 million, News Agency of Nigeria reports.

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Coronation Research’s Nigeria weekly update: CBN goes for growth

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We are accustomed to the Central Bank of Nigeria (CBN) limiting Naira liquidity for fear of upsetting the foreign exchange market. Now the CBN is unafraid of liquidity and is pushing growth – for now. Fixed income rates are falling. See page 2.

FX
This year US$18.79bn has flowed into the NAFEX market with Foreign Portfolio Investment (FPI) accounting for 65.40% of inflows (US$12.29bn). The CBN’s supply of US dollars to the NAFEX market has been 3.02% of inflows (US$0.57bn). In effect, FPI is supplying sufficient US dollars to take the pressure off the CBN, hence our confidence that the exchange rate will hold this year. And the CBN has new-found confidence to target growth.

Bonds & T-bills
The yield on a Federal Government of Nigeria (FGN) Naira bond with 10 years to maturity fell by 24bps to 13.95%, and at 3 years declined by 25bps to 13.20% last week. The yield on a 364-day T-bill fell by 51bps to 12.50%. The yield on a T-bill with 3 months to maturity declined by 27bps to 10.30%.

Investors are reacting to the CBN’s revised Standing Deposit Facility (SDF) placement by banks which is now capped at N2.0 billion (US$5.7 million) from N7.5 billion previously. The T-bill market is currently characterised by high demand and strong market liquidity which depressed yields this past week. In the absence of frequent Naira fixed income auctions by the CBN, we expect yields to be stable and not derail significantly from current levels. With this amount of liquidity in the market the initiative lies with the CBN to set rates.

Oil
The price of Brent rose by 3.99% last week to US$66.72/bbl. The average price, year-to-date, is US$66.10/bbl, 7.80% lower than the average of US$71.69/bbl in 2018, but 20.75% higher than the US$54.75/bbl average seen in 2017.

The 2019 oil market is themed by supply cuts, for the most part. The latest report from the International Energy Agency (IEA) shows that oil supply exceeded demand by 0.9 million barrels per day for the first half of the year. This comes on top of pre-existing stockpiles and rising shale production. With oil price protection in view, OPEC’s tightening measures are understandable, especially with the US/China trade war still unresolved.

Equities
The Nigerian Stock Exchange (NSE) All-Share Index lost 2.41% last week, resulting in a year-to-date return of negative 9.11%. Last week Cadbury Nigeria (+8.64%), Flour Mills of Nigeria (+8.00%) and Unilever Nigeria (+3.13%) closed positive while Forte Oil (-23.33%), PZ Cussons (-10.14%) and Nestle Nigeria (-8.92%) fell.

Last week saw the listing of Airtel Africa which closed the week at N323.50/share, down 18.98% from its listing price of N363.00/share. Such a reception continues to show weak investor sentiment in the market. While investors maintain a cautious stance on investing in equities, some stocks are trading close to multi-year lows and present a good entry point for investors, in our view.

The CBN pushes the growth pedal
The last few weeks have seen a flurry of activity from the CBN; a circular on mobile money & financial inclusion; hints of banking sector re-capitalisation 2.0; another circular prohibiting banks from a loan to deposit ratio less than 60%; and finally a ‘no thank you’ note to banks which may wish to park excess cash in the CBN vault, for excess cash balances above two billion Naira (US$5.6m).

What is the overall signal?
The CBN’s recent focus for the past two years has been on monetary stability. Following a 7.50 percentage point decline in inflation, a rise in foreign exchange reserves and hard-earned currency stability, one could argue that it has won the battle. And it has been helped by the downward prospects for US dollar interest rates, which take the pressure off emerging market currencies to some extent. Now the CBN can return to its other agenda. It wants economic growth.

Nigeria’s GDP growth rate mimics the growth rates of developed countries even though it isn’t one. One sign of sluggish growth has been slow growth in commercial bank loans, which suggests, among other things that the supply side of the economy is weak. The CBN’s approach to galvanising growth had been skewed towards the supply side, and it has deliberately held down loan rates in several areas, such as agriculture, in order to implement its policy. The problem with this initiative is that commercial bank loans have not grown as a result, leading the CBN to come up with more radical measures than before.

Typically banks keep cash balances when the CBN Open Market Operation (OMO) auctions are imminent, driving up overnight lending rates around auction dates. But there is a clear downward trend this year in the rate at which very short-term unsecured loans are traded between banks around OMO auction dates.

In fact, on 4 July the cost of overnight loans between banks fell to its lowest this year (4.86%) suggesting that for a given level of liquidity mop-up by the CBN, banks are willing to lend to themselves at cheaper rates than before. During H2 2018, this relationship was upward trending (when adjusted for outliers).

The CBN is attempting, through its circulars, to unlock excess liquidity trapped within the banking system in the hope that it will be channeled towards the real economy. Banks now have an extra incentive to target firms, and the affluent with (soft) loans when other forms of risk-free income become pressured.

All of this reads well for consumer spending, which is the dominant component of aggregate demand, but it may mean thinner margins for banks. The argument that banks may still expect to improve or maintain their margins without a corresponding expansion in loan books must be nuanced with the guidance that the CBN may restrict banks’ participation in the OMO and T-bill market for their own account. By and large, the CBN’s actions are likely to drag down interest rates until the point is reached where it finds Naira liquidity is negative for the currency.

Indeed, in our view the CBN may be wary of a steep reduction in market interest rates and what they could mean for the Naira exchange rate, on two counts. One, some of the excess liquidity in the banking system could find its way into the FX market. If stability remains a priority, the CBN will have to part with more of its dollar reserves. Two, moderating market interest rates could erode the appeal of the naira carry trade prompting foreign portfolio investors to unwind their positions.

But these are still early days, and we await the CBN’s upcoming auctions to learn more of its rate policy.

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What Dana Airline did to its passengers at Abuja international airport

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Passengers at the Nnamdi Azikiwe International Airport, Abuja, on Friday expressed disappointment in Dana airline, meant to fly them from Abuja to Port-Harcourt.

A cross section of the passengers who spoke with the News Agency of Nigeria (NAN) on Friday at the airport described their experience as unfortunate.

One of the passengers, Mr Waribo Kuku, said he was supposed to board Dana flight from Abuja to Port-Harcourt since Wednesday (July 10), but no flight was available.

Kuku called on the management of Dana airline to compensate him for the delay and inconvenience.

He also appealed to relevant authorities, such as the Federal Airport Authority of Nigeria (FAAN), Consumers Protection Council and SERVICOM, to address such grievances and ensure that customers were adequately compensated to serve as deterrent.

Another passenger, Mr Jerry Wanodi, told NAN that he booked a Dana flight from Abuja to Port-harcourt since Thursday but couldn’t board the flight due to rescheduling and cancellation of the flight.

Wanodi said that he had been at the airport since 2 p.m on July 11, up till the 6.30 p.m and there was no sign of any Dana Air flight on ground.

Another passenger of the same airline who pleaded for anonymity said he was disappointed with Dana and threatened to sue them for damages.

“I have to go back to my family, you know how women think. It’s like I have been giving excuses on why I haven’t come home yet.

“I am so disappointed with Dana Air and I want relevant authorities to ban Dana from flying in Nigeria

“I also want them to pay compensation to me for keeping me at the airport since Thursday,” he said.

Similarly, Mr Berepelebo George told NAN that he has lost an opportunity to be gainfully employed because of the cancelled flight.

“I have an interview appointment with an organisation in Port-Harcourt which I have missed due to flight cancellations.

“I want the relevant authorities to have regulations on airlines to tackle this impunity,” he urged.

Mrs Amaka Ojeka, another sad passenger, described the development as a national embarrassment.

Ojeka narrated how she flew in from Germany, noting that there was no stroller at the international wing and had to wait for 45 minutes before she was able to secure one.

She also expressed regret that she has been waiting to board Dana to Port-Harcourt but found out that there was no aircraft on ground.

“I am disappointed by what is going on at the airport because you can’t find this in a developed society.

“They are not organised and why is Dana not returning my money but they sent a message via email for me to come to the airport and there was no plane on ground.

“I went back and paid a hotel bill of N10,000 as well as airport taxi.

“Government should look into the matter and take appropriate measures to address it,” she said.

The FAAN authorities and Dana Air management were yet to react to the development in spite of media inquiries.

NAN reports that the passengers waiting to board Dana Airline flight to Portharcourt and Lagos have been kept in suspense amid mounting anxiety.

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