FAA halts Boeing MAX production expansion, ripples across aerospace industry

The U.S. Federal Aviation Administration (FAA) on Wednesday informed Boeing that it will not grant any production expansion of the MAX, including the 737 MAX 9.

This action comes on top of the FAA's investigation and ramped-up oversight of Boeing and its suppliers.

The FAA also approved a thorough inspection and maintenance process that must be performed on each of the grounded 171 Boeing 737 MAX 9 aircraft. Upon successful completion, the aircraft will be eligible to return to service.

"The January 5 Boeing 737 MAX 9 incident must never happen again. Accordingly, the FAA is announcing additional actions to ensure every aircraft is safe," the agency said.

The FAA's order means Boeing can continue producing MAX jets at its current monthly rate, but it cannot increase that rate. It offered no estimate of how long the limitation would last and did not specify the number of planes Boeing can produce each month.

Boeing said it would continue to cooperate "fully and transparently" with the FAA and follow the agency's direction as it took action to strengthen safety and quality.

Troubled flights

Boeing's latest crisis erupted after a panel blow-out on an Alaskan Air flight on January 5. The FAA soon grounded 171 MAX 9 jets for safety checks. Aviation regulators in the EU, Alaska Airlines, United Airlines, Turkish Airlines, and Panama's Copa Airlines also grounded their Boeing 737 MAX 9 planes for safety checks.

However, successive problems have occurred on Boeing airplanes, which raised doubts about the company's quality control among the public.

A Boeing 747 aircraft traveling out of Miami International Airport was forced to make a sudden return last week, as sparks erupted from the plane's engine.

The nose wheel of a Boeing 757 passenger jet operated by Delta Air Lines popped off and rolled away as the plane was lining up for takeoff over the weekend from Atlanta's international airport.

Impact on aerospace industry

The FAA's unprecedented intervention in production schedules could further delay some deliveries of new planes to airlines, potentially harming suppliers already grappling with the earlier MAX crisis and the pandemic.

Some airlines may face significant impacts due to any freeze on higher production, cautioned a senior industry source, although many have already factored in some delays as aerospace firms continue recovering from the pandemic.

Several U.S. carriers announced adjustments to their 2024 plans on Thursday.

Alaska Air Group, the operator of the 737 MAX 9 involved in the mid-air incident, projected a $150 million profit hit in 2024 due to the aircraft grounding lasting nearly three weeks. It also cast doubt on its capacity growth plans for the year, citing the grounding and "the potential for future delivery delays."

Southwest Airlines modified its fleet plans for 2024 due to supply-chain challenges and uncertainty over the certification of the smaller MAX 7. Before the January 5 accident, Southwest had anticipated the MAX 7 gaining certification by April.

Senator Tammy Duckworth, chair of the Senate Commerce Committee's air safety subcommittee, informed reporters after a meeting with Boeing CEO Dave Calhoun that she had asked him to withdraw a request to exempt the MAX 7 from certain regulations to attain FAA certification. Calhoun said he would consider it but made no promises, according to Duckworth.

Texas-based American has 20 MAX planes on order for deliveries this year. Chief Financial Officer Devon May told Reuters that the FAA's order may have a "modest" impact on those deliveries.

American is looking to place a new order for planes for deliveries in 2027 and beyond. May said the company is talking to Boeing, Airbus and Embraer for the new order, but is mindful of Boeing's ongoing issues.

"We absolutely take current events into consideration as we're going through our analysis of this order," May said in an interview.

United Airlines has 100 MAX deliveries scheduled for this year, according to regulatory filings. It warned of a wider-than-expected first-quarter loss due to the grounding, and CEO Scott Kirby said the company would also build a new fleet plan because of Boeing's delays.

The FAA did allow grounded MAX 9 planes to return to service once inspections were done, a relief to U.S. MAX 9 operators Alaska and United Airlines, which had been forced to cancel thousands of flights and aim to begin returning the planes to service on Friday. Panama's Copa Airlines started flying the grounded aircraft again on Thursday, a spokesperson for the company said.

Boeing paused production for 15 hours on Thursday at the Renton, Washington-area factory, where it manufactures the 737 MAX, for a "quality stand-down." Approximately 10,000 employees gathered in small teams during the event to identify quality and safety improvements that could be implemented in various work areas around the facility, Boeing reported.

Boeing shares closed down 5.7 percent on Thursday in a volatile session for the sector, while supplier Spirit Aerosystems fell 7.9 percent.

(With input from Xinhua, Reuters)