Boeing Co. (BA) - Get Report shares edged higher Friday as the planemaker inched closer to having the 737 MAX re-certified by the U.S. Federal Aviation Administration after overhauling its flight software system in the wake of two deadly crashes over a six month span that grounded the flagship carrier.
Boeing said the Maneuvering Characteristics Augmentation System, or MCAS, software update, which includes 360 hours of testing over more than 200 flights, will soon include detail on how pilots interact with the airplane controls and displays in different flight scenarios. Boeing will then schedule certification test flights with the FAA in the hopes of bringing the aircraft back into full service, while the Agency will meet update global regulators on the certification processes during a meeting in Fort Worth, Texas on May 23.
"With safety as our clear priority, we have completed all of the engineering test flights for the software update and are preparing for the final certification flight," said CEO Dennis Muilenburg. "We're committed to providing the FAA and global regulators all the information they need, and to getting it right."
"We're making clear and steady progress and are confident that the 737 MAX with updated MCAS software will be one of the safest airplanes ever to fly," he added. "The accidents have only intensified our commitment to our values, including safety, quality and integrity, because we know lives depend on what we do."
Boeing shares were marked 0.21% higher at the start of trading Friday to change hands at $354.86 each, a move that would trim the stock's decline since the Ethiopian Airlines crash on March 10 to around 16.3%.
Last month, Boeing posted weaker-than-expected first quarter earnings and pulled its earnings guidance for the rest of the year until it has clarity on the fate of its 737 MAX program.
Boeing also said it would pause its stock buyback program, which had taken down $2.3 billion in shares over the first quarter, and would issue fresh earnings guidance "at a future date" as it deals with the grounding of more than 300 737 MAX planes following last month's Ethiopia Airlines crash and a similar Lion Air tragedy last year in Indonesia.
Boeing said it shipped 89 737 MAX planes for the quarter, down from 132 over the same period last year, adding that commercial airplane operating margins narrowed 100 basis point to 9.9% as division revenues came in at $11.8 billion. Overall company inventories rose by 4.47% from the end of last year to $65.369 billion.
Boeing said in April that the preliminary report into the cause of Ethiopian Airlines Flight 302's fatal crash, which killed all 157 passengers on board on March 11, as well as the Lion Air 610 disaster in Indonesia in early October, which took the lives of 189 people, were caused by activation of the MCAS sytem, in response to "erroneous angle of attack information" from a broken sensor.
Boeing vowed to correct the cause of the tragic incidents while recognizing the "devastation of the families and friends of the loved ones who perished."
The FAA has said it would "evaluate aspects of the 737 MAX automated flight control system, including its design and pilots' interaction with the system, to determine its compliance with all applicable regulations and to identify future enhancements that might be needed."