Key points:

  • United Airlines shares fell 3.4% after the FAA stepped up oversight of the carrier.
  • Over the next few weeks, the FAA will conduct reviews of United’s work processes, manuals and equipment at its facilities.
  • United Airlines also reported delays in Boeing deliveries and a delay in certification of the Boeing MAX 10.

United Airlines shares fell 3.4% on Monday March 25 after the US Federal Aviation Administration (FAA) announced over the weekend that it would increase its oversight of the carrier. This decision was made due to a series of recent security incidents.

On Saturday, the FAA announced it would begin a formal assessment to ensure the Chicago-based airline is following safety rules. It also stated that the FAA may delay future United certification projects depending on the outcome of its oversight.

What actions can the FAA take?

The US Federal Aviation Administration (FAA) may not approve United Airlines allowing new aircraft or new routes.

The official assessment, initiated by the FAA, is a type of audit that U.S. carriers undergo every few years. The last time such an audit was conducted at United was in 2018.

The Airline Pilots Association (ALPA), the union representing United pilots, said it was unclear whether the FAA would suspend any United certification activities as part of this evaluation.

“What we do know is that Boeing delivery delays could have the same impact [on the company] as any weakening economy or any temporary pause in certification activity,”

– ALPA said.

Why did the company inspections begin now?

Over the past two weeks, United Airlines has experienced several incidents that have raised safety concerns in the airline industry.

On March 15, an exterior panel was discovered missing from a United plane landing in Oregon. The incident prompted an investigation by the US Federal Aviation Administration (FAA).

Earlier, a United Airlines Boeing 737 MAX skidded off the runway in Houston. A Boeing 777-200 operating a United flight to Japan lost a tire after takeoff from San Francisco and was forced to make an emergency landing in Los Angeles.

United Airlines said Friday that employees will observe an increased FAA presence at its facilities over the next few weeks. The FAA intends to conduct audits of airline operations, manuals and equipment.

Earlier this month, United Airlines also reported significant delays in Boeing deliveries this year. Certification of the Boeing MAX 10 has also been postponed indefinitely.