FAA Delays Boeing 737 Max Certification

June 27, 2019
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Boeing Co. (NYSE: BA) has faced increasing pressure in 2019, following fatal crashes and the grounding of 737 MAX jets around the world. The company has attempted to rectify a fatal software flaw, hoping to achieve approval for its jets to fly early in the second half of the year.

This now looks unlikely, as a new software glitch could add up to three months to the recertification process.

Test Pilots Find New Flaws in 737 MAX Software

Stock in Boeing dropped -2.53% in premarket trading on Thursday, following news that FAA test pilots had found a new flaw in the 737 MAX safety system.

Boeing announced on Wednesday that Federal Aviation Authority test pilots had “identified an additional requirement” for software changes. The company has been developing updated software over the last eight months.

Test pilots found in simulations that Boeing’s software could force the 737’s nose to pitch downwards automatically. Outcomes were disturbingly similar to two fatal 737 MAX crashes that caused 346 deaths in total.

The FAA is committed to keeping jets grounded until they are safe to fly. The government agency said this week that “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 they must mitigate.”

Heavy Blow for Boeing Best Selling Plane

Boeing has delivered just 387 of its 737 MAX planes to customers, despite having a backlog of over 5,000 orders. Deliveries have been halted while planes are grounded, but production has continued.

Airlines have been forced to cancel flights during the groundings, and some customers have even threatened to cancel their existing orders with Boeing. Garuda Indonesia was the first airline to cancel its orders, pulling out of a contract for 49 aircraft. The airline said it made the decision because of “concerns on the safety of passengers.”

Boeing Stock has gained 16.26% in 2019, although analysts believe that performance would have been stronger if not for the fatal crashes and following groundings. Boeing closed at $374.94 on Wednesday, significantly down from its 52-week peak of $446.01.

Wall Street analysts have predicted that it could pay up to $5 billion to compensate its customers for groundings and delivery delays. On the upside, the thousands of backlogged orders will ensure steady revenue for Boeing once software issues are resolved

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