Boeing Max Nears Milestone With Key Flight Targeted for June
(Bloomberg) -- Boeing Co. is closing in on a key milestone toward returning its beleaguered 737 Max to the commercial market, targeting later this month for hosting U.S. regulators on a flight to test the jet’s upgraded systems.
The company separately is notifying airlines of an important fix to the grounded jetliner’s wiring, said two people familiar with the planning who asked not to be named discussing sensitive matters. A draft of revised pilot training for the plane, which has been parked around the world since March 2019 as a result of two fatal crashes that killed 346 people, is also being shared with airlines, the people said.
The moves were strong indications that Boeing is finally nearing the end of the jet’s 15-month grounding and controversy that has engulfed the company after the two fatal crashes. The aviation titan has estimated that it will spend nearly $20 billion compensating customers, keeping suppliers afloat and restoring the production of jets.
“For Boeing, it could close a chapter that’s gone on longer than they wanted and kill a lot of speculation in the marketplace that the plane will never fly again,” said George Ferguson, analyst with Bloomberg Intelligence.
The flight by Federal Aviation Administration pilots to certify that the plane meets safety regulations is one of the critical remaining milestones. However, the people cautioned that the date hasn’t been finalized and has shifted repeatedly as Boeing completed its final work for regulators.
Boeing’s goal has been to return the 737 Max, a critical source of revenue, to commercial service in the third quarter. The Chicago-based company restarted manufacturing the single-aisle jet late last month, ending a five-month halt to work in its 737 factory in the Seattle suburb of Renton, Washington.
Boeing pared a decline on the news, falling 5.1% to $205.76 at 3:11 p.m. in New York after dropping as much as 8.9% amid a broader market slump. The company’s shares were down 37% this year through Tuesday, while the S&P 500 slipped 1.1%.
The company is revising a software system implicated in the two crashes that repeatedly drove down the noses of the jets due to a malfunction. Reviews of the plane’s safety following its March 13, 2019, grounding also discovered additional flaws that needed upgrading, including its flight-control computer, how electrical wires were bundled and software issues.
The FAA on Wednesday said it won’t approve the plane for passenger service until it is satisfied that all safety-related issues have been addressed.
“The FAA is in regular contact with Boeing as the company continues its work on the 737 Max,” the agency said in a statement. “The manufacturer must demonstrate compliance with all certification standards.”
Boeing declined to comment on the latest actions.
The FAA is broadly reviewing how it assesses pilot performance during malfunctions as a result of the crashes. An international panel of pilots known as the Joint Operations Evaluation Board must also review changes to the plane.
If all goes as planned, the jet will return to a market far different from that of March 2019, when regulators halted Max flying. A global pandemic has plunged the travel industry into its sharpest downturn on record, and many customers who were clamoring for the Max just months ago are now fighting for survival.
Boeing late last year discovered that there was a remote potential for wires within the same bundles on the jet to short-circuit in a way that could raise or lower the nose without a command by the pilots. As a result, it doesn’t meet aviation safety regulations.
After the FAA rejected the company’s initial suggestion that the wiring didn’t need repairing, Boeing has begun reworking the 450-odd jets it had built but never delivered during the grounding. The company began distributing a service bulletin to airlines, Wednesday, describing fixes that will need to be made on the 386 Max already in service.
Resuming deliveries to airlines would help return the Max program to a source of cash for the planemaker. Ferguson estimated that $12 billion to $15 billion in cash would be freed when Boeing ships all of the newly built aircraft lounging in storage lots.
The Max faces a slow comeback, however. Southwest Airlines Co. confirmed that it had received Boeing’s still-unapproved pilot training guidance. Southwest, the largest operator of the Max when it was grounded, wouldn’t resume flying the plane until the second half of December, according to the airline’s latest flight schedule.
“The Max return to service work continues and we’re hopeful it will be flying by the fourth quarter,” Southwest Chief Executive Officer Gary Kelly said May 29. “It’s a great airplane. It’s a superior airplane to the Next Gen 737 that we’re currently operating. It’s the most cost-effective plane in terms of fuel and maintenance.”
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