At a hearing Wednesday before the House Transportation and Infrastructure Committee, Federal Aviation Administration (FAA) chief Steve Dickson said that FAA recertification of Boeing Co. (NYSE: BA) 737 Max is fully under the agency’s control and that the FAA “is not delegating anything to Boeing.” As a result, recertification of the company’s best-selling passenger jet will slip into next year.
In an interview with CNBC, Dickson elaborated a bit, “If you just do the math, [recertification is] going to extend into 2020.” In his prepared statement for the House hearing, Dickson said, “The FAA will retain authority to issue airworthiness certificates and export certificates of airworthiness for all new 737 MAX airplanes manufactured since the grounding. When the 737 MAX is returned to service, it will be because the safety issues have been addressed and pilots have received all of the training they need to safely operate the aircraft. ”
The 737 Max was grounded in mid-March following a second crash in five months. The first crash, in October 2018, killed 189 passengers and crew aboard a Lion Air flight that had just taken off from Djakarta, Indonesia. The second, in early March, killed 157 passengers and crew on an Ethiopian Airlines flight just minutes after takeoff near Addis Ababa.
Among a long list of actions that must take place before the FAA lifts its grounding order on the 737 Max are an evaluation of pilot training needs, an FAA review of the final design documents and publication of a final airworthiness directive “advising operators of required corrective actions.” Dickson, a former Air Force and commercial pilot, reiterated his promise to fly the plane himself. He said he would not sign off on the aircraft until he is “satisfied that I would put my own family on it without a second thought.”
According to a report at Leeham News, Dickson had no answer when asked by committee chair Peter DeFazio why the plane wasn’t grounded following the Lion Air crash and before the Ethiopian Airlines crash. DeFazio said an FAA analysis done before the Ethiopian crash concluded that there would be “as many as 15 future fatal crashes over the life of the fleet” if a design flaw in the plane’s Maneuvering Characteristics Augmentation System, or MCAS, was not fixed. The MCAS sent erroneous information to the pilots who lacked training in how to override the information and retake manual control of the plane.
According to a projection from Cowen published by The Wall Street Journal, by the end of this month, Boeing will have built 416 737 Max jets that it cannot deliver until the FAA lifts its grounding order. An additional 383 planes that already had been delivered to customers remain grounded. Boeing is projected to have built another 31 undeliverable planes by the end of January before deliveries begin in February. The projections, drawn up at the end of November, appear to be optimistic given Dickson’s testimony.
As the noon hour drew to a close Wednesday, Boeing’s stock traded down about 0.8%, at $345.12 in a 52-week range of $292.47 to $446.01. The 12-month consensus price target on the stock is $375.15.
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