FAA Cleared Boeing 737 MAX To Be Airborne Again

The Boeing Company (NYSE: BA) shares rose sharply to 14 percent in premarket trading on Wednesday after Steve Dixon, head of the United States Federal Aviation Administration (FAA), released a document on the process for returning top-end Boeing 737 MAX aircraft to commercial service.

After its most profitable 737 MAX narrow-body passenger planes were decommissioned worldwide in March 2019 after two fatal crashes caused by a breakdown of its electronic flight control system and sensors, Boeing is facing the worst crisis in its history. “The issue of the 737 MAX” has cost Boeing about $20 billion, according to analysts’ estimates.

The consequences of the COVID-19 pandemic and the reluctance of airlines to buy new Boeing aircraft have compounded the crisis. Boeing lost orders for more than 1,040 737 MAX aircraft this year as nearly 600 were withdrawn from the pre-order list and about 450 were cancelled by air carriers.

The FAA news marks the conclusion of 20 months of reviews and corrections into mistakes made in the 737 MAX aircraft design and computer systems.

The FAA has released flight instructions that airlines and pilots must comply with before 737 MAX aircraft are lifted into the sky.

It is not yet clear how long it would take to enforce these directives, but according to different figures estimates for the same are from a period of two months to six months or more. American Airlines (AAL) and Southwest Airlines (LUV) were anticipating this to happen earlier at the same time. In late December, American Airlines expected to resume 737 flights with MAX, and in the second quarter of 2021 with Southwest.

The FAA has confirmed that the 737 MAX has been re-certified with an “unprecedented degree of cooperation and independent inspection by aviation authorities around the world, which will help to secure official aircraft flight permits from regulatory authorities in other countries.

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Earlier this month, the European Union Aviation Safety Agency said the Boeing 737 MAX will fly safely again.

On Tuesday, the US House of Representatives unanimously approved legislation by the Federal Aviation Administration to reform the aircraft certification process, which was the reaction of lawmakers to the Boeing 737 MAX crisis. The legislation would enhance the supervision of new aircraft by the FAA.

A related FAA credential reform bill is scheduled for a vote by the Senate Commerce Committee on Wednesday, although it is unknown if Congress will pass the amendments before the end of the year.

Peter DeFazio, Chairman of the House Transportation and Infrastructure Committee, said the FAA failed to adequately ensure the safety of the 737 MAX and called the aircraft’s certification “a flawed mechanism that has eroded public confidence.”

The Boeing Company (NYSE: BA) ended the session on Wednesday at $203.30 with a drop of -3.21 percent.

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