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European Regulators Want a More Thorough Redesign of Key Boeing 737 Max Systems

By Lou Whiteman – Jun 25, 2020 at 10:58AM

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The changes would add to the company's costs and potentially delay deliveries.

European safety regulators are reportedly demanding Boeing (BA -1.05%) make substantial changes to its 737 Max, including retrofits to the planes already in service, in a fresh blow to the troubled airplane and its manufacturer.

The 737 Max has been grounded since March 2019 after a pair of fatal accidents. Boeing has developed a fix for the flight control system (the so-called MCAS) blamed as the main cause of the two crashes, and hopes to have the plane airborne again in the second half of 2020.

A Boeing 737 Max in flight.

The 737 Max. Image source: Boeing.

But according to The Seattle Times, safety regulators in Europe and Canada want to see extensive changes to other parts of the plane's flight control systems, which the newspaper said "could add substantial cost" to the Max program and slow Boeing's ability to ramp up deliveries and boost its cash flow.

The Europeans have identified three issues that the newspaper says will require substantial redesign. They have said they will allow the plane to fly prior to these modifications being made, but are looking at a tight timetable of late 2021 to have the changes completed.

The modifications would undo some of Boeing's efforts to avoid revamping the new 737 design in hopes of avoiding costly simulator training for pilots. It would also bring the Max sensor suite to par with the sensors used on Airbus' rival A320 jet.

The changes would take a near-term bite out of Boeing profitability. There are about 500 737 Max planes already built that would need to be retrofitted.

Boeing bled through $4.7 billion in the first quarter in large part because of 737 Max-related expenses, and with airlines cutting service due to the COVID-19 pandemic, the company already faces a slow and arduous challenge in trying to place the hundreds of planes built but not yet delivered to customers.

Boeing has telegraphed to suppliers it does not expect to hit its original 737 Max production goals for 2020.

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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