by David Shepardson, Valerie Insinna and Lisa Barrington
WASHINGTON (Reuters) – The U.S. civil aviation authority, the Federal Aviation Administration (FAA), on Wednesday temporarily banned Boeing from increasing the production rate of its 737 MAX, which could have repercussions on plans development of global airline companies and equipment manufacturers.
The FAA justified this decision by the need to “guarantee (Boeing’s) accountability and full compliance with required quality control procedures,” after the loss of an escape door on a Boeing 737 in mid-flight. Alaska Airlines MAX 9 earlier this month.
The FAA indicated that Boeing could continue production of the 737 MAX at the current monthly rate but that the aircraft manufacturer could not increase this rate. She did not specify how long this injunction would last.
On January 6, the civil aviation authority ordered the grounding of 171 Boeing 739 MAX 9s after the Alaska Airlines incident, which caused no casualties.
“We will not approve any request from Boeing to increase production of the 737 MAX or open additional production lines for these aircraft until we are satisfied that the quality control issues discovered during this processes have been resolved,” FAA Administrator Mike Whitaker said in a statement.
The US planemaker said it would continue to cooperate “fully and transparently” with the FAA and follow the agency’s guidelines.
Boeing shares lost 1.9% on Thursday in pre-market trading.
PUT BACK INTO SERVICE
The FAA’s decision could call into question the plan to create a new 737 MAX production line by mid-2024 in Everett, Washington, which was deemed necessary to meet demand .
Boeing did not wish to comment on a possible impact on this factory.
According to an industry source, some airlines could be affected “significantly” by Boeing’s freezing of production increases as carriers renew and increase their fleets in the face of the strong post-pandemic tourism recovery.
United Airlines had planned to receive 100 737 MAXs this year.
“If we do not know exactly how long it will take for the FAA to be satisfied with the solutions provided by Boeing, this represents an obvious obstacle to ramp-up projects,” Jefferies analysts underline in a note published Thursday.
“If the production cap were to remain in place for an extended period, this would represent a worst-case scenario for the LEAP engine’s market share potential, which would be negative for Safran,” they add.
The French equipment manufacturer produces the LEAP aircraft engine as part of its joint venture with General Electric (GE), CFM International.
Safran did not immediately respond to a request for comment.
Alongside the production restriction, the FAA approved an inspection and maintenance process to allow Boeing 737 MAX 9s grounded since January 6 to return to service.
This should allow Alaska Airlines and United Airlines, which were forced to cancel thousands of flights, to put their planes back into service on Friday and Sunday respectively.
(Reporting Valerie Insinna and David Shephardson in Washington, Lisa Barrington in Seoul and Tim Hepher in Paris; with the contribution of Rajesh Kumar Singh in Chicago and Sophie Yu in Beijing; French version Camille Raynaud and Blandine Hénault, edited by Jean-Stéphane Brosse)
©2024 Thomson Reuters, all rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. “Reuters” and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.