Boeing Co.’s 737 Max can safely return to the skies with an extensive package of fixes, U.S. regulators ruled, after a scarring 20-month hiatus prompted by a pair of fatal crashes.
The actions announced Wednesday on the Federal Aviation Administration’s website mark the end to the longest grounding of a jetliner in U.S. history and set the stage for airlines and other regulators around the world to resume passenger service with the plane.
Boeing shares jumped 5.3% to $221.27 in pre-market New York trading. Through Tuesday, they had lost 50% of their value since the March 10, 2019 crash of an Ethiopian Airlines Group flight that triggered the global grounding of the 737 Max.
The FAA action is a dramatic turning point for Boeing after more than two years of bad news surrounding its best-selling model. But the aircraft’s return won’t mean an immediate end to the controversy or a cash infusion for the company’s suffering bottom line.
A criminal probe by the U.S. Justice Department continues. Frayed relations with the FAA threaten to result in fines or other penalties and the Securities and Exchange Commission also has an open investigation. Meanwhile, the Covid-19 pandemic has crushed the airline industry, prompting airlines to cancel orders for the Max and thwarting Boeing’s plans to quickly reverse its losses.
“It’s Boeing’s most important program and the United States’ most important manufactured product, but you couldn’t ask for a worse market right now,” Richard Aboulafia, aerospace analyst with Teal Group, said in an interview before the FAA’s move. “It’s not a question of opening the floodgates and watching the cash pour in the way it would’ve been a year ago.”
The FAA is requiring repairs to a safety system that went haywire in the two crashes and multiple other flaws discovered during months of reviews. It is also mandating new pilot training for the Max focusing on issues that arose in the accidents. (end of excerpt)
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