Boeing executives now expect the 737 Max will not be approved to fly until the middle of this year, the company said Tuesday.
“We are informing our customers and suppliers that we are currently estimating that the ungrounding of the 737 MAX will begin during mid-2020,” the statement said.
The plane has been grounded since March because of two fatal crashes that killed 346 people. Boeing had initially hoped a fix for the safety system, known as MCAS, could be approved in a matter of weeks after the second crash. But it has missed one target date after another for getting approval to get the plane in the air again
The news is a major setback for Boeing and will significantly raise the costs of the ongoing crisis for the company as well as make it more difficult to resume production of the plane.
Only six weeks ago the company hoped to get approval for the plane to fly before the end of 2019. But FAA Administrator Stephen Dickson announced on Dec. 11 that would not happen until some time this year. Also in December, Boeing turned over to the FAA a trove of embarrassing internal communications in which employees mocked the plane and questioned its safety. Those documents were made public earlier this month.
Boeing said the new timeline is “informed by our experience to date with the certification process. It is subject to our ongoing attempts to address known schedule risks and further developments that may arise in connection with the certification process. It 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.”
The FAA has declined to give any timeline for when it expects to approve the plane to fly again.
Boeing continued to build the jets, albeit at a slightly reduced pace of 42 planes a month. In recent days, the company temporarily halted production of the 737 Max for the first time since the crisis began. It now has about 400 completed jets parked in Washington and Texas, waiting to be delivered to airlines around the world.
Boeing had to halt production because it doesn’t get most of its money from the sale of the jets until they are delivered. It could not indefinitely continue to incur the costs of building them without delivering them.
The company is due to report financial results on Jan. 29, and it is expected to announce another huge charge for the cost of the crisis at that time, if not before then. In July, it took a $5 billion charge related to the cost of compensating airline customers for the grounding, costs that will now be significantly larger. Boeing said it will also provide additional information about the plans to return the Max to service at that time.
“Returning the Max safely to service is our number one priority, and we are confident that will happen,” said Boeing. “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.”
Boeing (BA) shares were halted Tuesday afternoon, ahead of that release of news. The shares fell 5.5% before the halt then came back slightly following the statement more than 3%.
