Aircraft manufacturer Boeing (BA, Financial) reported on Wednesday that the ban on 737 Max has been conditionally lifted by the U.S. Federal Aviation Administration and that it is set to take off again, thereby ending the plane's 20-month long grounding.
The Boeing 737 Max passenger airliner was grounded globally in March last year following two fatal crashes which killed 346 people. It was the longest jet grounding in the history of commercial aviation (well, the longest that was eventually allowed to fly again, at least).
The U.S. transportation agency has issued software upgrades and training changes that both Boeing and airlines need to complete prior to resuming commercial flights. The changes are expected to fix the errors that caused the fatal crashes.
American Airlines (AAL, Financial) plan to reintroduce the 737 Max flight on Dec. 29 this year. If the aircraft operator re-launches the jet, it would be the first airline to do so post the Max's grounding. United Airlines (UAL, Financial) is expected to follow suit in early 2021.
According to reports, the Chicago-headquartered aircraft manufacturer has built 24-hour surveillance and monitoring mechanisms for tracking technical glitches for all 737 MAX planes that are in service.
The FAA's decision does not extend to Europe, which is why an EU approval is required so that the plane can return to service outside the U.S. Europe's European Union Aviation Safety Agency (EASA) has conducted several studies and test flights to see whether the U.S. planemaker's 737 Max has any other technical problems or faults that caused fatal crashes. Fortunately for the company, the EASA is now expecting to lift the ban as well, and the 737 Max grounding is expected to be lifted in January.
In addition to the final clearance from the FAA, a go-ahead from the EASA would be a milestone in the process of the 737 MAX returning to service. It is essential to allow the aircraft to hit the international runways. The EASA has demanded Boeing to adhere to additional safety measures for the 737 MAX to control and avoid such mishaps owing to technical problems.
A clearance from the EASA will also help the company to deliver the planes in regions that have its prime customers and unlock close to $12 billion in cash that was blocked in hundreds of 737 Max airplanes which were built during the worldwide grounding. Patrick Ky, head of the European Union Aviation Safety Agency, commented:
"We've started preparing measures that will allow its return to service. After having looked at the plane all around, including with test flights, we can say that the plane is safe."
Other regulators worldwide are waiting for the final approval of the European regulator rather than instantly following FAA's decision to lift the ban. As Ky said:
"It is clear that there were a number of dysfunctions in (FAA) actions and their relations with Boeing. I won't go into details as it is not up to me to do that. The FAA is in the process of putting in place corrective measures."
Disclosure: I do not hold any positions in the stocks mentioned.
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