Boeing Doesn't Expect Regulatory Approval of 737 MAX Until Mid-2020

Boeing doesn’t expect regulators to sign off on the troubled 737 MAX until mid-2020, later than the planemaker had expected.
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Boeing (BA) - Get Report said Tuesday that it doesn’t expect regulators to sign off on the troubled 737 MAX until mid-2020.

Shares have been halted Tuesday. At last check, the stock was down 5.5% to $306.27. 

The date is months later than the manufacturer previously expected.

The 737 MAX was grounded last year after two fatal crashes killed hundreds of people. Last month Boeing ousted its CEO over his handling of the crisis and suspended production of the plane.

"We are informing our customers and suppliers that we are currently estimating that the ungrounding of the 737 MAX will begin during mid-2020," Boeing said in a statement. "This updated estimate is informed by our experience to date with the certification process. It is subject to our ongoing attempts to address known schedule risks and further developments that may arise in connection with the certification process."

The revised estimate also accounts "for the rigorous scrutiny that regulatory authorities are rightly applying at every step of their review of the 737 MAX's flight control system and the Joint Operations Evaluation Board process which determines pilot training requirements.

"Returning the MAX safely to service is our number one priority, and we are confident that will happen," the statement said. "We acknowledge and regret the continued difficulties that the grounding of the 737 MAX has presented to our customers, our regulators, our suppliers, and the flying public."

Separately, reports earlier said Boeing was in discussions with several banks to secure some $10 billion or more in loans to offset costs stemming from a production halt of its grounded 737 MAX jetliners following two fatal crashes.

Some of Boeing's biggest customers, meanwhile, such as Southwest Airlines (LUV) - Get Report and American Airlines (AAL) - Get Report, have extended the suspension of 737 jets in their fleet until at least June.

CNBC reported that the Seattle-based aerospace giant has so far secured at least $6 billion from a group of banks, and is talking to other lenders about more.

Earlier this month, the Federal Aviation Administration said Boeing faces a $5.4 million penalty for installing faulty parts on 178 of its 737 Max aircraft, according to the Federal Aviation Administration.

The agency charged that “Boeing failed to adequately oversee its suppliers to ensure they complied with the company’s quality assurance system,” according to a press release announcing the proposed penalty.

Last month, the FAA proposed a $3.9 million penalty for Boeing for installing the same kind of faulty parts on 133 of its 737 NG airplanes.

According to the FAA, the faulty parts were made by Southwest United Industries in late June and early July of 2018. The parts were then shipped to Spirit AeroSystems (SPR) - Get Report which then delivered them to Boeing.