The Federal Aviation Administration (FAA) has lifted the grounding of the 737 MAX 9 jet that was put in place after an emergency door plug incident on an Alaska Air flight. In an announcement on Wednesday, the FAA stated that MAX 9 planes that successfully pass an enhanced inspection process and comply with the original design can resume operation.
This development is a positive one for United Airlines, Alaska Air, and other carriers that operate MAX 9 jets, as it allows them to resume their flight services. However, the FAA also expressed concerns about Boeing's production practices.
The agency stated, "We will not approve any request from Boeing to expand production or add more production lines for the 737 MAX until we are confident that the quality control issues discovered during this process have been resolved." This decision comes in addition to the FAA's ongoing investigation and increased oversight of Boeing and its suppliers.
Boeing has not yet responded to the FAA's remarks.
Boeing had plans to increase the production of 737 MAX planes to 38 per month by the end of 2023 and further increase it to 50 per month by 2025 or 2026. The lack of production expansion is seen as a setback. Following the news, Boeing's stock declined by 4.4% in after-hours trading, closing at $204.75. In regular trading, the stock gained 1.4%, while the S&P 500 and Nasdaq Composite rose by 0.1% and 0.4%, respectively.
Since the incident involving the MAX 9 door plug on January 5, Boeing's stock has dropped by approximately $40 per share, resulting in a loss of around $25 billion in market value.
For Boeing, this incident adds to a series of challenges and raises investor concerns regarding safety and FAA oversight. Nonetheless, the FAA's statement does not imply that Boeing will never ramp up production of 737 MAX jets. However, the company will face stricter regulatory measures before any production increases are approved.
Given the recent issues with the MAX line, having additional oversight from the FAA should ultimately be considered a positive aspect.
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