Boeing CEO offers hope on the 737 MAX’s return
The latest good news from Boeing is that there isn’t any new bad news. CEO Dennis Muilenburg met with investors at a conference on Wednesday and gave no indication that new trouble has cropped up in the effort to fix the grounded 737 MAX jet. The CEO is focusing on updating the software that underpins the jet’s flight-control system.
“Once we complete the software update on the MAX, I’m very confident that airplane will be one of the safest airplanes ever to fly,” he said to the crowd. “And we know getting the MAX back to a healthy state is key to a broader, healthy business.”
The back story. The Federal Aviation Administration met with its international counterparts on May 23 in Texas to review the software changes-Boeing’s proposed fix for the jet, which has been grounded world-wide since mid-March.
Investors had hoped for news about when the MAX can carry passengers again, but acting FAA administrator Dan Elwell didn’t provide a concrete timeline.
What’s new. Boeing has been making “clear and steady” progress since the FAA meeting, Muilenberg told the conference.
He also said Boeing has made progress on pilot training, another key issue. The 737 MAX was designed to fly like the prior iteration of the 737 platform, called the 737 NG, which means people qualified to fly the NG could pilot the MAX as well, without additional flight-simulator training.
That could change. If it does, reintroduction of the MAX into commercial service might be delayed.
“[We’ve had] a good discussion [with pilots and regulators] around training requirements and capabilities like computer-based training and simulator training,” Muilenburg said in response to a question. “So I saw that as another way point of progress.”
It wasn’t a lot of detail from the CEO, but at least it indicates no new issues have surfaced recently.
Looking ahead. Cowen analyst Cai von Rumohr revisited his timeline for a reintroduction of the MAX in a Wednesday research report. He believes the FAA could still approve Boeing’s fix by the end of June, but said the potential for additional pilot training could add some time before the MAX is flying again world-wide.
That would have a transitory impact on cash flow and earnings, but implicit in Muilenburg’s comment and von Rumohr’s report is a belief that the 737 MAX will fly again, with only minor modifications. That is a controversial idea to some stakeholders, but it is still the prevailing sentiment on Wall Street.
Boeing stock was down 1.9% in Wednesday afternoon trading, while the Dow Jones Industrial Average was off by 1.2%. Boeing shares have fallen 18% since a MAX jet flown by Ethiopian Airlines crashed on March 10, raising concern about the safety of the jet following a crash last fall. The Dow is down 1.7% over that period. www.barrons.com