U.S. aviation regulators will conduct the final checks of the initial Boeing Co. 737 Max jets to be delivered once commercial flights resume, rather than allowing company employees to handle routine sign-offs.
The plan amounts to the latest signal from the Federal Aviation Administration that it intends to tighten its control over all aspects of the grounded jetliner as Boeing prepares to finalize fixes and restart shipments to customers. The Max, the company’s best-selling model, has been banned from flying since March after two deadly crashes killed 346 people.
FAA Administrator Steve Dickson has been underscoring that the agency won’t be pushed to move too hastily on decisions related to the Max, even as tensions rise between the planemaker and its chief regulator. The latest salvo adds to the daunting logistics that Boeing faces once the Max is cleared to fly, as it works with airlines and lessors to resume passenger service and clear its ramps of hundreds of newly built jetliners.
“The FAA notified Boeing today that the agency will retain authority over the issuance of Airworthiness Certificates for all newly manufactured 737 Max aircraft,” the agency said in a statement Tuesday.
Boeing fell 1.4% to $368.40 at 2:38 p.m. in New York, the biggest decline on the Dow Jones Industrial Average. Since the second Max crash, the shares fell 12% this year through Tuesday, while the Dow advanced 11%.
Separately, the Seattle Times reported Wednesday that the damage from a September stress test on a different model, the 777X, was worse than previously disclosed. An explosive depressurization ripped the fuselage skin open and caused a door to blow off the damaged frame, the newspaper said.
Boeing said the rupture, which occurred under aerodynamic stresses not encountered in regular flight, wouldn’t affect flight-testing or the planned 2021 debut of the twin-engine behemoth. The 777X is the first aircraft to be certified in the wake of the 737 Max accidents, which prompted greater scrutiny of Boeing’s design processes and the FAA’s reliance on company engineers to certify portions of the manufacturer’s work.
With the 737 Max, Boeing had suggested earlier this month that it might be able to begin delivering the first of its idled planes before the end of the year if the FAA certifies its revamped flight control system in December. The FAA hasn’t said whether it would allow that to happen since new pilot training standards aren’t expected to be adopted until early next year.
At the current production pace, Boeing could have 386 newly built Max in storage by the close of 2019, Cowen & Co. analyst Cai von Rumohr said in a report last month. Boeing isn’t allowed to deliver the single-aisle aircraft while the flying ban is in place.
How quickly Boeing is able to resume deliveries and clear its storage lots has wide-ranging ramifications for the company’s cash consumption as well as its ability to speed up production of the 737, its main source of profit. The manufacturer has stashed freshly minted Max jets around the Pacific Northwest and as far afield as San Antonio since the plane was grounded March 13.
The large number of planes awaiting delivery significantly exceeds any previous backlog and such a circumstance wasn’t considered when FAA granted Boeing employees authority to make approvals of aircraft, the agency said in a letter sent Tuesday to the company.
As a result, the FAA said it would perform the sign-offs until Boeing can show its quality control processes are adequate to handle the unprecedented situation. The regulator has enough employees to keep up with the initial inspections, said an official familiar with the matter.
“We welcome and embrace this decision as we continue to work with the FAA on the safe return of the Max to service,” Boeing spokesman Chaz Bickers said in an email. “Safety is our number one priority.”
On Nov. 11, Boeing outlined the remaining milestones for the Max and its ambition to resume deliveries before the end of 2019. The statement boosted the company’s shares but rankled FAA officials, according to people familiar with the situation.
Boeing Chief Executive Officer Dennis Muilenburg requested that the handovers begin in a phone conversation with Dickson, according to the people, who weren’t authorized to speak on the matter and asked not to be named. The FAA chief later reiterated in a statement and video message to employees that agency staff wouldn’t be pressured into hurrying their work.
Several steps remain before the plane can return to the skies in the U.S. The agency must approve Boeing’s software fixes to the plane and test them with groups of foreign pilots. FAA’s own test pilots must also fly the plane.
Additionally, the agency is drawing up a new training course for pilots before they can fly the plane. That isn’t expected to be completed until January. No decision has been made at FAA on whether Boeing can deliver planes to customers before the training is completed.
Southwest Airlines Co., the largest Max operator, said the FAA action “doesn’t change our early planning for return to service.” American Airlines Group Inc. said it continues to work closely with Boeing and the FAA, “which controls the process.” It isn’t clear what effect the FAA decision could have on deliveries, said Ross Feinstein, a spokesman for American. The Allied Pilots Association, which represents aviators at American, applauded the FAA’s move.
Regulators outside the U.S. must also sign off on the redesign and the training separately. A spokeswoman for the European Union Aviation Safety Agency declined to comment on the FAA’s plan for checking new Max planes. But the European regulator defended the practice of delegating some review to subject experts at aerospace manufacturers, noting it “cannot possibly check everything with the resources at its disposal.”
The issue of how much authority the FAA has granted Boeing to use its own employees to sign off on designs and other work has been controversial since the crashes. The flight-control feature on the plane linked to the crashes was partially approved by Boeing’s engineers.