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Boeing shares fall again after probe report into FAA approval of 737 MAX

Published 03/18/2019, 09:37 AM
Updated 03/18/2019, 09:37 AM
© Reuters. FILE PHOTO: The company logo and trading informations for Boeing is displayed on a screen on the floor of the NYSE in New York

© Reuters. FILE PHOTO: The company logo and trading informations for Boeing is displayed on a screen on the floor of the NYSE in New York

(Reuters) - Boeing (NYSE:BA) Co shares fell 3 percent on Monday, after a pair of newspaper reports over the weekend raised more questions about the certification process for its 737 MAX jets before two recent deadly crashes.

A Wall Street Journal report on Sunday said the U.S. Transportation Department was probing the Federal Aviation Administration's (FAA) approval of the 737 MAX and in particular its anti-stall (MCAS) system.

The Seattle Times separately reported that Boeing's safety analysis of a new control system known as MCAS (Maneuvering Characteristics Augmentation System) had crucial flaws, including understating power.

The paper also said U.S. FAA followed a standard certification process on the MAX rather than extra inquiries.

"Boeing (will face) a lot more scrutiny of its processes than it has seen previously," Richard Safran (PA:SAF) of Buckingham Research said.

"The Inspector General of the U.S. Transportation Department is going to be looking for any issues with respect to how management handled the certification process."

Shares of the company have declined about 10 percent since the March 10 Ethiopian crash that killed 157 people, wiping nearly $25 billion off its market capitalization, according to Refinitiv data.

Ethiopia said on Sunday that the crash of the Ethiopian Airlines plane had "clear similarities" with October's Lion Air crash.

The U.S. Transportation Department's inquiry, which was launched in the wake of the accident in October that killed 189 people, has warned two FAA offices to safeguard computer files, the WSJ reported.

"The FAA will be called on the carpet for its role in the certification process and any contribution to the MCAS issue," Safran said.

Last Monday, Boeing said it would deploy a software upgrade to the 737 MAX 8, hours after the FAA said it would mandate "design changes" in the aircraft by April.

© Reuters. FILE PHOTO: The company logo and trading informations for Boeing is displayed on a screen on the floor of the NYSE in New York

Boeing's shares were down 2.8 percent at $369.20 in early trading, making them the biggest drag on the Dow Jones Industrial Average.

Latest comments

all the sudden all high school dropouts are becoming aviation experts
Everybody looks know what was the cause meanwhile the experts still are investigating. Interesting fact that will apply later electing a president. Funny.
yes, of course, it is the third world fault...the gold USA is always blameless...
A result of outsourcing engineering to third world country like India and lack of rigourous quality control
the faulty wing design and software fix from good old USA though!
the clear issue here is not hardware issues but software that controls the hardware
senior management should be fired, pensions and bonuses should be clawed back. Bad decisions should have consequences. "I am not going if it's a Boeing" !
You'll be walking then as 50 percent of flights are on boeing aircraft.
I think that depends on location, and where flights are going to and coming from.Airbus and Boeing deliveries should be about even, if you are factoring in Boeing's acquisition of McDonnell Douglas.
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