Key points:

  • The FAA will not give Boeing permission to increase production of the 737 MAX in the coming months.
  • Boeing forecast that costs will exceed revenues in 2024, partly due to delivery delays.
  • Boeing shares rose 0.6% at the end of trading.

During a meeting with outgoing Boeing CEO Dave Calhoun and other company executives, the head of the US Federal Aviation Administration (FAA) said the agency wouldn’t give the company immediate permission to ramp up production of the 737 MAX. These measures are explained by the need for Boeing to solve current safety problems.

What restrictions are imposed on Boeing?

Increased FAA oversight of Boeing will continue in the coming months. As part of this oversight, there will be weekly meetings and quarterly exchanges between the company’s management and the US regulator.

Recall that in February the FAA prohibited Boeing from increasing production of its best-selling aircraft. The decision comes after a door panel exploded on the new 737 MAX 9 during a flight on January 5.

FAA Administrator Mike Whitaker said he doesn’t expect Boeing to get approval to ramp up production of the MAX “in the next few months.” He also said that he has not yet discussed this issue with Boeing management. Therefore, the FAA will closely monitor Boeing’s operations to evaluate how effectively the company is implementing quality and safety improvements.

Boeing is currently producing significantly less than the 38,737 MAX per month allowed by FAA directive. According to Whitaker, the company did not ask for an exemption from the cap, and they did not even have preliminary discussions about it.

What measures is Boeing taking in this situation?

Boeing announced the introduction of a new quality control system that will allow it to monitor the status of production processes in real time.

According to the company, the system will “provide access to real-time information about the health of the production system, allowing potential quality issues and therefore potential safety hazards to be identified and addressed at an early stage.”

Production of the 737 MAX aircraft is key to Boeing’s financial stability. Boeing’s chief financial officer said last week that Boeing will likely generate less cash than it spends in 2024, partly due to delivery delays.

Boeing’s plan to improve its quality control system covers four categories: 1) investments in personnel training; 2) elimination of defects; 3) introduction of new technologies; 4) updating existing processes.

Earlier, the US Federal Aviation Administration said Boeing was required to provide more details about its plan “in the interests of transparency and public confidence.”

Boeing shares closed with an increase of 0.6%.