Boeing’s 737 MAX Jet Is Cleared for Takeoff

Changes to the Boeing 737 MAX

The Federal Aviation Administration announced yesterday that Boeing’s (BA) 737 MAX jets have passed safety tests and are cleared to carry passengers. The planes have been grounded since March 2019 when two crashes in Indonesia and Ethiopia took 346 lives.

The crashes were caused by problems with software in the planes called MCAS. Over the past 20 months, Boeing has made changes to the software and to the jets’ design. The company also created new flight crew training. Regulators in other countries are still conducting safety reviews of the updated aircraft, but now that the FAA has made its announcement other regulators are likely to follow its lead.

Financial Difficulties for Boeing

Though the FAA’s decision comes as a relief for Boeing, the company is still facing severe difficulties as a result of the pandemic. Airlines are struggling with weak demand, and many are canceling or postponing aircraft orders to save cash. This has left Boeing with a glut of supply of 737 MAX jets and other planes.

Boeing currently has about 450 completed MAX jets in stock. It expects to sell roughly half of them by the end of next year and the remaining ones the year after. Boeing plans to keep its production low until it is able to sell the planes it already has in stock. As a result, the company has consolidated a number of its factories and is in the process of cutting roughly 30,000 jobs.

Boeing’s Shares Rally

Boeing and airlines are already trying to help customers feel safe flying as COVID-19 infections rise. Now they will also be working to show travelers that the updated 737 MAX jets are safe.

The 737 MAX jet is a single-aisle plane which airlines use for short to intermediate distances.
At the moment, due to worries about COVID-19, many consumers are choosing to drive rather than take short flights which would use 737 MAX jets. Airlines and Boeing are hoping that travelers will have confidence in the improved 737 MAX jets.

Despite these difficulties, investors seem more hopeful about Boeing’s future than they did in the early months of the pandemic. The company’s shares have climbed more than 40% so far this month and gained 3% after the FAA’s announcement yesterday.

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