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Coronavirus to Further Delay Boeing 737 MAX Return Date

By Lou Whiteman - Apr 24, 2020 at 9:12AM

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Work-from-home and travel restrictions are complicating the re-certification process.

Boeing (BA -0.88%) is unlikely to meet its goal of returning its 737 MAX to service by mid-year, The Wall Street Journal reports. This marks a fresh blow for the aerospace giant as it struggles with a rapidly shrinking order book and tries to navigate through a potential cash crunch.

International regulators grounded the 737 MAX in March 2019 after a pair of fatal crashes, and Boeing has missed multiple self-imposed deadlines to return the plane to the air. New CEO David Calhoun, who took over in December, has been pushing to get the plane cleared to fly again by mid-year.

However, there have been warning signs Boeing's proposed timetable isn't feasible. The Federal Aviation Administration in March said Boeing needs to modify or move wire bundles in the plane due to a short circuit risk, and earlier this month reports surfaced saying that COVID-19 pandemic-related travel restrictions and work-from-home could delay final certification testing.

A 737 MAX in flight.

Image source: Boeing.

The FAA still hasn't signed off on details of Boeing's 737 MAX software fixes, The Wall Street Journal reports. A combination of stay-at-home orders covering employees and travel restrictions that have made it hard to conduct required flight tests involving foreign pilots have pushed the MAX's return to August or later, says the WSJ report.

At one point, many observers expected the 737 MAX to become one of the top selling commercial aircraft of all time, but its issues, coupled with rapidly slowing airline demand for new planes due to the pandemic, have led to questions about whether Boeing will ever reach the full production rate it once projected for the plane.

Even if demand for the jet is tepid, however, Boeing is desperate to get the plane flying again so it can start to make deliveries on the backlog of jets it manufactured but could not deliver last year. Boeing has lobbied the U.S. government for upwards of $60 billion in assistance to inject liquidity into the commercial aerospace supply chain during the pandemic, though CEO Calhoun has insisted Boeing has ample sources of liquidity at its disposal.

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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