FAA Administrator hints at later return for 737 MAX

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According to the Wichita Business Journal, the head of the Federal Aviation Administration hinted at the Dubai Airshow this week that the Boeing Co.’s hope of clearing the 737 MAX by the end of the year might be overly optimistic. 

Reiterating that his agency is working around safety and not a timeline, FAA Administrator Steve Dickson, according to a report from Gulf News, told reporters at the show that it “remains to be seen” if the MAX flies again before January and that a “more conservative” timeline would be March 2020. 

The 737 MAX has been grounded since March, following two deadly crashes in five months that killed 346 people. 

Boeing’s (NYSE: BA) most recent forecast called for its software upgrades to the troubled plane to be approved and the grounding order lifted, at least by the FAA, in December — a milestone the manufacturer said could clear the way for deliveries of the MAX to airline customers to begin again. 

The company also said associated pilot training likely wouldn’t be approved until January, meaning that it would be after the first of the year before airlines could begin returning the jets to passenger service. 

Boeing has also repeatedly said that its outlook has only been its best assumption and that the MAX’s return will ultimately be up to global regulators. 

Dickson’s projection that late in the first quarter would be a more conservative outlook is more in line with U.S. airlines that have already removed the MAX from their schedules until March. 

The return of MAX is being closely watched in Wichita, where the 737 — now driven almost exclusively by the new MAX variant — is the single most important aircraft program to the local economy. 

The city’s largest employer, Spirit AeroSystems Inc., builds 70 percent of the structure on the 737, work that in turn helps drive hundreds of smaller area suppliers. 

If a lifting of the grounding order could allow for deliveries to resume, as Boeing has suggested, it would help the manufacturer get a jump on working through the logjam of jets that have built up in inventory during the grounding. 

That in turn could help provide some production certainty going forward, as Boeing CEO Dennis Muilenburg has previously said that a return that slips too far past the company’s fourth-quarter target could result in a production cut on the program or even a temporary halt to output. 

While Boeing trimmed its own rate on the 737 to 42 aircraft per month after the grounding, Spirit (NYSE: SPR) has remained at the pre-grounding rate of 52 per month for components that include the aircraft’s full fuselage. 

Boeing’s expected plan has been to begin increasing its production again after the plane returns, eventually reaching a previous target of 57 aircraft per month. 

Spirit will remain at 52 per month until it burns through the inventory of excess components it has been building and holding until delivery is requested by Boeing, a plan that is expected to keep the local company at its current output level on the 737 for at least two years. 

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