FAA Says Boeing 737 MAX Won’t be Flying in 2019

December 12, 2019
622 Views

Boeing (NYSE: BA) troubled 737 MAX jets will not be back in the air in 2019, according to the latest information from the Federal Aviation Administration (FAA).

Boeing’s popular jets have been grounded around the world since March this year, following two crashes that killed 346 people. Fatal safety flaws were found in the flight control software that Boeing had installed on its new planes.

The latest news strikes a harsh blow to the company, which had previously claimed that its 737 MAX models would be recertified before the end of this year. The ongoing groundings have eroded Boeing’s stock and caused billions in lost revenue. The company’s share price is up just 8.35% year to date, compared to double-digit growth across all major indexes.

FAA Uncertain When 737 MAX Will be Certified for Operation

FAA Administrator Stephen Dickson appeared on the CNBC network on Wednesday, before providing testimony to the House Transportation Committee.

Dickson said that there were numerous steps in the certification process, and that “If you do the math, it’s going to extend into 2020.”

Unwilling to go into more detail regarding an exact timeframe, he added that “If I had that kind of a crystal ball, I would certainly be able to share it. But it’s very important that our team works very closely with the international authorities that have been working with us and with the Boeing team to do this right.”

He reassured lawmakers that the process would not be rushed, saying that “I have directed FAA employees to take whatever time is needed to do that work.”

The Delay Will Ensure Global Air Safety

Despite the groundings, 737 MAX planes are the most popular in Boeing’s catalog. The company currently has over 4,900 orders confirmed, with 387 deliveries made since 2017.

The FAA is not taking any chances with air safety, despite the popularity. It was allegedly aware of inherent problems after the first 737 crash, but it took a second crash before a ground order was issued. Regulators can’t afford to cut corners with the current process.

Boeing believes that its new software eliminates the issues that caused the fatal crashes.

A Difficult Decision for Investors

Investors can buy Boeing stock at a relative bargain today, and it comes with a compelling dividend yield of 2.35%.

There’s an inevitable upside, with thousands of orders essentially guaranteeing revenue in the years to come. Investors should consider how this low point for the company could actually be an opportunity to buy the stock while it’s down.

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