Boeing's 737 MAX Production Freeze Remains As FAA Demands Safety Overhaul

Zinger Key Points
  • FAA will not approve Boeing's 737 MAX production increase soon.
  • Boeing must enhance its Safety Management System.

The Federal Aviation Administration (FAA) will persist in holding Boeing Co. BA accountable after evaluating the company’s roadmap to rectify its systemic safety and quality-control issues, Administrator Mike Whitaker said Thursday, after a three-hour meeting with senior Boeing leaders at FAA headquarters.

Mike Whitaker tasked Boeing in February with creating a comprehensive action plan to enhance safety standards following a door plug incident on a Boeing 737 MAX operated by Alaska Air Group Inc ALK.

The roadmap aims to reset Boeing’s safety culture and address findings from the FAA’s special audit and an expert review panel report.

The company developed the proposal over the past 90 days with detailed input from the FAA throughout the process.

Senior Boeing leadership presented the roadmap to the FAA, discussing future implementation. Boeing is now required to have a mandatory Safety Management System (SMS), ensuring a structured approach to hazard identification and risk management.

Following the January 5 incident, the FAA intensified oversight on Boeing, including increasing safety inspectors in facilities and halting production expansion.

Whitaker said, “On the FAA’s part, we will make sure they do and that their fixes are effective. This does not mark the end of our increased oversight of Boeing and its suppliers, but it sets a new standard of how Boeing does business.”

On Thursday morning, Whitaker met with Boeing President and CEO David Calhoun and other senior leaders to discuss the next steps.

Also Read: Boeing’s Employee Speak Up On Safety, Quality Soar 500% After 737 MAX Incident – What’s The Benefit?

Boeing must provide detailed updates on completed actions and future plans. Actions include strengthening its SMS, simplifying processes, enhancing supplier oversight, improving employee training and communication, and increasing internal audits.

The FAA will monitor Boeing’s progress through a team of subject matter experts, weekly performance reviews, and monthly progress assessments.

Enhanced oversight includes more safety inspectors at Boeing and Spirit AeroSystems Holdings Inc SPR facilities, increased employee engagement, and additional inspections and audits during critical production points.

The FAA has also taken further actions as part of its aggressive oversight, including grounding 171 Boeing 737-9 MAX aircraft, increasing safety inspector presence, halting production expansion, and conducting thorough audits of Boeing’s production line.

The FAA continues to issue airworthiness certificates for newly produced Boeing 737 MAX aircraft.

The production of the 737 MAX is crucial to Boeing’s financial stability. The company’s top finance executive recently projected a cash burn in 2024 due to delayed deliveries.

The FAA announced earlier that it would not approve any requests from Boeing for an expansion in production or additional production lines for the 737 MAX until the quality control issues are resolved.

Boeing stock has lost 16% in the last 12 months. Investors can gain exposure to the stock via IShares U.S. Aerospace & Defense ETF ITA and Invesco Aerospace & Defense ETF PPA.

Price Action: BA shares are trading higher by 0.34% at $173.34 at the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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