Boeing Scorched by NTSB Report on 737 Max Crashes

The National Transportation Safety Board (NTSB) on Thursday announced that it has issued seven safety recommendations to the Federal Aviation Administration (FAA) related to the NTSB’s continuing investigation of two Boeing Co. (NYSE: BA | BA Price Prediction) 737 Max aircraft crashes. The two crashes killed 189 people last October in a crash in Indonesia and another 157 died in a March crash near Addis Ababa, Ethiopia.

Both accidents have been attributed to a new Maneuvering Characteristics Augmentation System (MCAS) designed to push the nose of the plane down if the system detects that the plane’s nose was rising and its speed falling, indicating a possible stall.

In Thursday’s report, the NTSB is “calling upon” the FAA “to address concerns about how multiple alerts and indications are considered when making assumptions as part of design safety assessments.”

According to the NTSB report, Boeing and the FAA made assumptions during the 737 Max’s design and certification that left “a gap between the assumptions … and the real-world experiences of these crews, where pilots were faced with multiple alarms and alerts at the same time.”

The FAA allowed these assumptions during certification analyses without offering “clear direction” about how pilots will recognize and respond to multiple alarms and alerts. The NTSB also states “more robust tools and methods need to be used for validating assumptions about pilot response to airplane failures in safety assessments developed as part of the U.S. design certification process.”

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Boeing has updated the MCAS software to address the design flaws and an NTSB spokesperson said that the company already may have completed the additional testing the agency is asking for. In any event, the NTSB wants the recommended testing to be conducted on the Max before it is allowed to fly again.

The agency also recommends that the FAA re-evaluate other airplanes that have been certified under existing FAA rules.

Boeing stock dipped by about 1% earlier this morning but traded down by only about 0.1% in the noon hour at $385.79. The stock’s 52-week range is $297.47 to $446.01, and the consensus 12-month price target is $411.14.

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