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The Federal Aviation Administration announced Wednesday that it is imposing unprecedented restrictions on Boeing’s jet manufacturing facilities.
It will cap any 737 Max production rate increases until it’s clear Boeing can ensure its quality control is fully compliant with regulations.
At the same time, the FAA said it has approved the detailed inspection measures it will require of air carriers that fly Boeing 737 Max 9s before the grounded jets can return to passenger service.
That provides Alaska Airlines and United Airlines a path to getting their Max 9 fleets back in the air. Those planes were grounded following a Jan. 5 midair blowout on an Alaska Airlines Max 9.
Alaska said it expects to bring the first few of its 65 Boeing Max 9s back into scheduled commercial service on Friday, “with more planes added every day as inspections are completed and each aircraft is deemed airworthy.”
United said it will begin the return of its 79 Boeing Max 9s aircraft to scheduled service on Sunday.
But for Boeing, the FAA mandate is a government demand to slow down and get its act together.
“Let me be clear: This won’t be back to business as usual for Boeing,” FAA Administrator Mike Whitaker said in a statement. “We will not agree to any request from Boeing for an expansion in production or approve additional production lines for the 737 Max until we are satisfied that the quality control issues uncovered during this process are resolved.”
That means Boeing cannot ramp up production in its Renton, Washington, final assembly plant as planned to bring in more cash and begin to try to catch up with Airbus production rates. And it cannot activate the new Max assembly line already in advanced construction inside its Everett assembly plant.
The move is an extraordinary intervention by the federal government in a private business, mandating for Boeing’s management that ensuring the safety of air travel must take precedence over its financial targets.
Scott Hamilton, founder and managing director of aviation intelligence firm Leeham.net, said in an interview he’s never heard of the FAA taking such an action.
He said the directive could lead to delays in deliveries of jets that Boeing had already scheduled on the expectation of higher rates a few months out.
Since the FAA mandate speaks of capping rather than halting production rate increases, Boeing may be allowed some leeway. But it’s unclear how Boeing will satisfy the FAA that its quality management system is back in compliance or how long the mandated restrictions will last.
If the FAA continues to intensify scrutiny of Boeing and more quality problems are uncovered, Hamilton said the next step could be what he called the “nuclear option”: temporarily withdrawing the company’s production certificate required to manufacture planes.
“I think this is maybe the tip of the iceberg,” he said, adding that the consequences are potentially so damaging that “Boeing had better get its house in order.”
[At Alaska and United airlines, frustration with Boeing’s manufacturing problems is boiling over]
Boeing in a brief statement said it “will continue to cooperate fully and transparently with the FAA and … also work closely with our airline customers.”
Kristine Liwag, an industry financial analyst with Morgan Stanley, told investors in a note Wednesday that she expects Boeing’s share price to drop in response to the news as Boeing has been trumpeting planned increased jet production rates as the key to promised cash flow increases.
Liwag added a warning of “the potential for an expansion of the scope of FAA investigation to other 737 Max derivatives like the Max 8.”
“Should the FAA take a broader look at the problem … there is a risk that the FAA mandates a more thorough inspection of all fasteners for in-production 737 Max aircraft before delivery, as well as the global in-service fleet and not just the subset of the 737 Max 9,” Liwag continued.
The fuselage panel that blew out on the Alaska jet filled a hole in the fuselage that is there for some low cost carriers that fill the plane with more passengers and need an extra emergency exit on the Max 9.
U.S. carriers don’t have an emergency exit there, but a permanent plug.
The FAA also laid out Wednesday the series of actions it’s already taken to increase oversight of Boeing’s production lines since the midair fuselage blowout on Alaska Airlines Flight 1282.
“The quality assurance issues we have seen are unacceptable,” said Whitaker. “That is why we will have more boots on the ground closely scrutinizing and monitoring production and manufacturing activities.”
The federal safety agency said it has:
— Launched an investigation scrutinizing Boeing’s compliance with manufacturing requirements.
— Aggressively expanded oversight of new aircraft with increased presence of FAA personnel on the floor inside the Boeing factories.
— Been closely monitoring data such as defect counts on the manufacturer’s assembly lines and incidents aboard jets in service with airlines to identify risk.
— Launched an analysis of potential safety-focused reforms around quality control and delegation.
“The FAA will use the full extent of its enforcement authority to ensure [Boeing] is held accountable for any non-compliance,” the agency said.
The FAA said the inspection process the airlines must complete before any Max 9 aircraft can fly again begins with detailed visual inspections of left and right mid-cabin exit door plugs of the type that blew out on the Alaska jet as well as dozens of associated components.
Specific bolts, guide tracks and fittings that hold the door plug in place are required to be inspected. Fasteners must be retightened to specifications. And any damage or abnormal conditions must be repaired.
“This aircraft will not operate until the process is complete and compliance with the original design is confirmed,” the FAA stated.
Alaska said each final inspection is expected to take about 12 hours per airplane.
The FAA’s reference to fully using its “enforcement authority” seems a direct response to demands from Congress.
“We want to know what the FAA has done, what legal enforcement action have they taken,” Sen. Maria Cantwell, D-Wash., chair of the Senate Committee on Commerce, Science, and Transportation, said last week.
After the FAA announcement Wednesday, U.S. Sen. Patty Murray, Washington’s senior senator and chair of the Appropriations Committee, issued a statement citing “reporting by the Seattle Times that seems to show serious safety lapses and failures in the quality control processes at Boeing is absolutely alarming.”
“Profits can’t come before safety — ever,” Murray said. “It is extremely important for the NTSB to conduct a full investigation to get to the bottom of exactly what happened, why, and how Boeing and the FAA will prevent it from ever happening in the future.”