Boeing has told customers and suppliers the 737 Max will stay parked on tarmacs until the middle of 2020, extending the grounding months past the one-year mark.
The troubled jet has fallen further behind schedule as Boeing strives to meet milestones required by US aviation regulators. The Max was grounded in March 2019 following two crashes in five months that killed a combined 346 people.
Boeing’s stock price fell up to 5.5 per cent in afternoon trading, after initial reports of the new delay, and closed down 3.3 per cent on the day, at $313.37.
“This updated estimate is informed by our experience to date with the certification process,” the company said in a statement. “It is subject to our ongoing attempts to address known schedule risks and further developments that may arise in connection with the certification process.”
The estimate also accounts for the “rigorous scrutiny that regulatory authorities are rightly applying at every step of their review of the 737 Max’s flight control system” and pilot training requirements, Boeing added.
Whenever the FAA lifts the grounding, it will take about two more months for airlines to add the plane back into their schedules. If the grounding lasts until July 1, Boeing will miss airlines’ busy summer travel season for the second year in a row.
Airlines may be less eager to accept deliveries during their autumn slowdown, said Bank of America Merrill Lynch analyst Ron Epstein. Purchasing contracts also usually allow airlines to walk away after a year, giving customers the muscle to negotiate discounts from the plane maker. It also prolongs the cash bleed at Boeing, which Mr Epstein estimates at $1.5 billion per month.
Boeing’s announcement surprised Wall Street. Yet an important question to consider, Mr Epstein said, is whether, under new chief executive David Calhoun, the company “put out a target they knew they can beat”.
The company originally said the grounding would be lifted in December, but last month the Federal Aviation Administration publicly disputed that timeline, and the friction with the regulator contributed to the ouster of Boeing chief executive Dennis Muilenburg.
The timetable for the Max’s certification flight has slipped before. FAA chief Steve Dickson said in December that the manufacturer had almost a dozen tasks still to complete. At that time, US officials placed the jet’s likely return to service in February or March.
A key hurdle still to clear is a certification flight, followed by Boeing’s submission of final documentation and training plans to the FAA.
Pushing back the certification date is not linked to new technical difficulties with the jet that became public last week, a person familiar with the matter said. Boeing found a new software glitch during a technical review, it emerged on Friday.
Boeing emphasised in its statement that the FAA would determine when to lift the grounding, but was providing its estimate on the return to service to help stakeholders.
The FAA said in a separate statement that “the agency is following a thorough, deliberate process to verify that all proposed modifications to the Boeing 737 Max meet the highest certification standards”, adding: “We have set no timeframe for when the work will be completed.”
The post Boeing shares slide as 737 Max timeline slips again appeared first on Financial Times.