Aerospace & Defense

Boeing 737 Max On Track to Fly in Europe Again

The European Union’s civil aviation regulator is prepared to recertify the Boeing Co. (NYSE: BA) 737 Max passenger jet to return to service in January, according to the agency’s director.

In an interview with a French newspaper on Saturday, European Aviation Safety Agency (EASA) head Patrick Ky said the agency’s studies “show us that the plane can return to service” and that it is “likely” that the agency will decide in January to put the plane back into service.

Ky’s statement follows last Wednesday’s announcement from the U.S. Federal Aviation Administration (FAA) that the grounding order on the 737 Max issued in March of 2019 had been rescinded and that the planes could begin flying again after meeting certain other guidelines.

The major change to recertification in both the United States and Europe is that the two civil authorities will conduct their own safety assessments of Boeing airplanes and that those assessments will occur earlier in the certification process.

The FAA will require that each airplane be certified by the agency rather than by Boeing, as had been past practice. The agency took a lot of heat from congressional investigations for allowing Boeing personnel to conduct final inspections of the planes before they were delivered to customers.

The EASA recertification means that Boeing can once again begin to deliver planes to European airlines and, critically for Boeing, get paid. Ireland-based Ryanair, for example, has unfilled orders for 135 of the planes, and leasing firm AerCap has 71 unfilled orders.

Boeing still faces some headwinds. Transport Canada, that country’s airline regulator, has not yet approved the 737 Max for recertification. In the past, the Canadian agency generally followed FAA certification decisions, but Transport Minister Marc Garneau said last week that there will be differences this time between FAA and Canadian requirements. Three Canadian airlines have unfilled orders for a total of 69 737 Max aircraft.

Another major market for Boeing, China, has remained silent on lifting its grounding order on the 737 Max. China was the first country to ground the 737 in 2019, and the country’s Civil Aviation Administration (CAAC) already has said that Boeing will have to meet the CAAC requirements before the planes can fly again. Boeing’s most recent orders and deliveries report indicates that Chinese airlines have unfilled orders for 104 new planes.

Boeing’s problems with China go beyond the safety of the 737 Max. Teal Group analyst Richard Aboulafia told CNN recently that Boeing is not in control of its fate in China: “In China, Boeing is prisoner to forces beyond mere aviation market dynamics. It would be impossible for Boeing to not be wrapped up in this giant mess, involving trade barriers, [intellectual property] disputes, and tariffs.”

Because China plays such a large role in the growth of the passenger plane market, Boeing has got to come up with a way to regain a solid foothold in the country.

Boeing stock traded up about 2% shortly after the opening bell Monday, at $203.37 in a 52-week range of $89.00 to $374.77. The price target on the stock is $200.55.

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