Boeing said Tuesday it now projects the 737 Max won’t get Federal Aviation Administration (FAA) clearance to fly until mid-year, about three months further out than previously expected.
“We are currently estimating that the ungrounding of the 737 Max will begin during mid-2020,” Boeing said in a statement, after it informed the FAA and airlines Tuesday morning. “We acknowledge and regret the continued difficulties that the grounding of the 737 Max has presented to our customers, our regulators, our suppliers, and the flying public.”
Previously, the industry had anticipated the FAA completing its process by late March or early April. The expectation now is late June or July, according to a person with detailed knowledge of Boeing’s latest projection. That would extend the grounding of the Max to at least 15 or 16 months.
An official with a U.S. airline cautioned that this time Boeing is being very conservative and that clearance for the Max to fly potentially “could come earlier.”
The approximately three-month schedule slide likely means the shutdown of 737 Max production in Renton will also be extended. That will raise fears among employees that Boeing may be forced to lay off some workers.
However, Boeing said Tuesday that “today’s announcement does not change employment plans previously shared with teammates in December.”
Boeing said Renton employees are either preparing the 737 production lines for the future ramp-up or have moved to other programs and that such reassignments will continue.
American Airlines, Southwest Airlines and United had anticipated further delay and were also allowing another month to six weeks after clearance to get their grounded Maxes ready and their pilots trained. So even with the previous expectation of clearance in April, all three had already removed the Max from their schedules until early June.
With Tuesday’s announcement, those airlines must now plan on not having the airplane for almost the entire peak summer travel season.
All three U.S. airlines that have grounded Maxes report their fourth quarter earnings this week, and were unable to provide detailed responses ahead of that announcement.
However, the airline official said Boeing is being deliberately conservative and providing what’s seen as a worst-case timeline. As a result, he said, “right now, we are not looking to change our date” of early June for having the Max in the flight schedule.
If that worst case does play out, the airline official said, “summer is the busiest time of the year for every U.S. airline and so not having the airplanes you were expecting will have an impact.”
Boeing will report its own fourth-quarter earnings results next week, and will update the expected cost of the Max grounding. Analysts expect further large charges on top of the $9.2 billion in costs that was projected through September, the first six months of the grounding.
That consisted of a $5.6 billion write-off to cover compensation to airline customers and suppliers plus $3.6 billion in increased future 737 manufacturing costs due to the extended period at lower production rates.
Next Wednesday, Boeing must now update those cost projections for a further nine months from September through June.
In an interview, Boeing spokesman Gordon Johndroe said that with the quarterly earnings pending, “for financial planning purposes we have to make some estimates and assumptions (on the schedule for return to service). We want to be as transparent as possible and transmit that to customers and to the FAA.”
Boeing’s statement said the updated schedule reflects “our experience to date with the certification process” and “our ongoing attempts to address known schedule risks and further developments that may arise.”
This implies that Boeing has built in some extra time to allow for still-unknown issues that may pop up during the rigorous scrutiny that the FAA and foreign air safety regulators are applying in their review of the 737 Max’s flight control system.
This month, two new issues cropped up that were unrelated to the flight control software — the Maneuvering Characteristics Augmentation System (MCAS) — that Boeing has updated after it was implicated in the two fatal Max crashes in Indonesia and Ethiopia.
First, engineers determined that there was a “theoretical possibility” of an electric short in a wire bundle that could potentially move the Max’s horizontal tail and push the jet’s nose down.
This wiring problem didn’t surface in the original certification of the Max because Boeing then used an FAA-approved assumption that pilots would respond to an emergency within four seconds. Following the two Max crashes, Boeing is using a much more conservative assumption in its new System Safety Analysis on the upgraded Max that pilots could take 15 seconds to respond.
This assumption implies that electrical shorts occurring in up to a dozen locations near the airplane’s tail and in the electronics bay could have a much greater impact than previously envisioned and so must be definitively prevented.
The problem is still being assessed and Boeing is meeting with FAA experts to decide if its protections against electrical shorts — ranging from shielding to insulation to circuit breakers — are sufficient or if physical separation of the wires will be needed.
Then last week, Boeing acknowledged that during a technical review ahead of finalizing the jet’s new software package, engineers discovered another problem. A software monitor designed to run a check on airplane systems when the jet is powered up wasn’t being initiated correctly.
A person familiar with the details said that software monitoring glitch is not the reason for the new delay, but is indicative of the type of unforeseen issue that can come up and for which Boeing now feels it needs to leave extra buffer in the schedule.
As part of the intensive regulatory review of the Max, the next major milestone was supposed to be the couple of days of FAA certification flights that were recently expected to happen this month. Now, said the person familiar with the latest projections, those flights aren’t expected until late next month or early March.
Following those flights, the FAA will spend a week or more analyzing the data before moving on with its certification process.
And in parallel to that, the Joint Operations Evaluation Board set up by the FAA must finalize pilot training requirements. Boeing’s decision this month to recommend Max flight simulator training for all pilots before they fly the updated jet means that the simulator procedures will have to be certified too.
The person familiar with the details said the revised schedule was a result of the company learning through experience that each milestone of the certification process “is taking longer than any of us anticipated.”
Boeing emphasized that the FAA will make the final call as to when the Max is cleared to fly. “However, in order to help our customers and suppliers plan their operations, we periodically provide them with our best estimate of when regulators will begin to authorize the ungrounding of the 737 Max,” Boeing said.
In December, the FAA publicly rebuked Boeing and then-CEO Dennis Muilenburg for issuing statements indicating that the Max could return to service within a month or so. FAA Administrator Steve Dickson interpreted those statements as unrealistic and designed to put pressure on his agency to move faster.
Since then, Boeing refrained until Tuesday from any guidance on the Max timeline, deferring to the FAA. Rather than exerting pressure to get the Max flying earlier, the new Boeing guidance is further out than all previous expectations. It means the grounding of the Max will extend for at least 15 to 16 months.
The FAA, in a statement, said it’s following “a thorough, deliberate process to verify that all proposed modifications to the Boeing 737 Max meet the highest certification standards,” adding that “we have set no timeframe for when the work will be completed.”
Boeing shares fell $10.78 Tuesday to close at $313.37, down more than 3% to the stock’s lowest level since mid-December 2018, some six weeks after the first 737 Max crash.
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