Boeing to Restart Production On 737 MAX Jets

January 23, 2020
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Aerospace company Boeing Co. (NYSE: BA) is planning to restart production on its troubled 737 MAX jets, even before it receives approval to fly from the Federal Aviation Administration.

With CEO Dave Calhoun stepping into his new role at the company, it was announced on Wednesday that the company could start building more 737 MAX jets in the coming months.

It is expected that planes will be cleared for flight by June, but Calhoun said on Wednesday that “Production will be reinvigorated months before that moment in June because we’ve got to get that line started up again. The supply chain will be reinvigorated even before that.”

It is the first time that Calhoun has spoken to the media since taking over as CEO on January 13.

Long Delays in Federal Approval

The FAA is still in the process of checking the safety of the 737 MAX and all of its flight systems. Planes have been grounded worldwide since March 2019. Fatal safety flaws were discovered following two separate crashes that killed 346 people.

Boeing has faced a long and financially damaging process since the groundings. Investigators have found that many aspects of the 737 MAX were self-certified by Boeing. Recent email leaks have also revealed that company insiders were aware of safety problems and issues with manufacturing quality.

Boeing’s reputation has suffered and its stock has tanked.

The FAA is now taking its time to clear the 737 MAX for flight. The organization is checking and clearing all flight systems and software, while also consulting with aviation experts and pilots.

Boeing can’t afford to have lingering problems when the 737 MAX is reentered into service. The FAA also understands that the stakes are high. Its leadership as a regulator has been questioned since flaws were discovered.

Should Investors Take Confidence From Boeing’s Latest Announcement?

The stock market hasn’t responded positively to the latest announcement. Share price is down -6.31% over the last five days, contributing to a -13.83% decline over the last year.

Investors are fatigued by the constant setbacks and delays in flight approval. While Boeing undoubtedly has an upside with thousands of orders on the books, it could take years for the company’s reputation and its stock to recover.

Investors can pick up Boeing at a relative bargain today but should understand that the upside may not come until after the current fiscal year.

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