Boeing Pushes Back Expected MAX Return -- Update
January 21 2020 - 4:12PM
Dow Jones News
By Andrew Tangel and Doug Cameron
Boeing Co. on Tuesday pushed back its timetable for regulators
to clear the return of the troubled 737 MAX for commercial service,
saying it doesn't expect approval until at least the middle of the
year.
The company said its new estimate for the Federal Aviation
Administration's signoff -- which people briefed on the matter
expect in June or July -- takes into account the need for approving
training for pilots and "experience to date with the certification
process."
The internal target provided to airlines and suppliers is far
longer than most airlines and industry analysts expected, leaving
the global fleet short of almost 5% of planned capacity for the
second peak summer season in a row, adding to the mounting
compensation bill faced by Boeing.
The global MAX fleet has been grounded since March last year in
the wake of two fatal crashes, with Boeing repeatedly pushing back
when it expected regulators to approve changes to its flight
control systems and training regimes.
Boeing shares were down 5.5% at $306.27 when trading was halted
before the announcement, having hit a 52-week low earlier in the
session. The stock recovered some ground when trading
restarted.
The latest guidance could force carriers to push back their MAX
flying plans yet again. Airlines had previously said they would
need a month or more after regulators clear the plane for training
and maintenance. U.S. carriers have already canceled planned MAX
flights through early June, and have said they prefer not to
introduce new jets, which often arrive with small quality issues
that can affect reliability, during the peak summer season.
Carriers are adjusting to the prospect that regulators may
require pilots to go through costly and time-consuming simulator
training before flying the plane again.
The guidance comes a week after David Calhoun took over as
Boeing's chief executive following the ouster of Dennis Muilenburg.
Mr. Calhoun said he planned to focus on rebuilding trust in the
company as well as improving its transparency.
The company last week said it was working to correct another
software problem that has cropped up in its effort to fix its 737
MAX aircraft, adding to the technical issues that have complicated
and delayed the grounded fleet's return to service over many
months. The latest glitch, which Boeing said it was working to
correct, prevents the jet's flight-control computers from powering
up and verifying they are ready for flight, according to industry
and government officials.
Boeing had recently shied from providing further guidance on the
return of the MAX after missing a string of its own estimates and
suffering criticism from the FAA that its guidance was pressuring
regulators.
However, the company had to provide internal assessments of the
MAX return to close its 2019 accounts, with fourth-quarter earnings
due to be reported on Jan. 29.
Boeing's revised estimate takes into account extensive reviews
expected by regulators, new hiccups that could emerge and the
potential to approve additional simulator training for pilots, one
of the people familiar with the projection said.
While Boeing's previous estimates for when regulators would
approve the MAX have irked the FAA, the plane maker felt compelled
to provide an update for financial planning and to inform airline
customers and suppliers, this person added. Boeing notified the FAA
of its revised estimate on Tuesday, this person added.
On Tuesday, the FAA reiterated that it is sticking with "a
thorough, deliberate process," but declined to discuss specific
technical issues.
More than 380 jets were grounded last year, while Boeing has
built another 400 that are stored and awaiting delivery. It is
expected to take as long as two years to reintroduce all the
planes, and Boeing this month halted production of the MAX to
prevent the inventory growing.
The production halt has added to pressure on MAX suppliers. The
largest, Spirit AeroSystems Holdings Inc., has already said it is
planning an initial 2,800 layoffs. Its shares fell another 4% on
Tuesday.
Write to Andrew Tangel at Andrew.Tangel@wsj.com and Doug Cameron
at doug.cameron@wsj.com
(END) Dow Jones Newswires
January 21, 2020 15:57 ET (20:57 GMT)
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