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After Nearly 2 Years, FAA Says Boeing's 737 Max Can Carry Passengers And Fly Again

Nearly two years after the Boeing Co (NYSE: BA) 737 Max was grounded due to safety issues, the Federal Aviation Administration has officially cleared the aircraft to fly once again.

· 11/18/2020 09:34

Nearly two years after the Boeing Co (NYSE:BA) 737 Max was grounded due to safety issues, the Federal Aviation Administration has officially cleared the aircraft to fly once again.

What Happened? The FAA said Wednesday it's satisfied with the changes Boeing has made to the 737 Max after a series of collaborative and independent regulatory reviews.

“Those regulators have indicated that Boeing’s design changes, together with the changes to crew procedures and training enhancements, will give them the confidence to validate the aircraft as safe to fly in their respective countries and regions,” the FAA said in a statement.

Related Link: Boeing Option Trader Bets $3M On 10% More Upside

Why It’s Important: Regulators grounded the 737 Max back in March of last year following two crashes that killed 346 people. After lengthy investigations, regulators determined the planes’ automated flight control system was involved in both crashes.

Boeing has reportedly updated that system to make it safer and less aggressive.

Now that the 737 Max is cleared for takeoff, Boeing will set out to stop the bleeding with its shrinking backlog. The company’s outstanding orders dropped by 50 planes in October to just 4,275. Boeing’s backlog is now down from 4,774 planes in May.

The FAA clearance will allow Boeing to start delivering roughly 450 737 Max places that it has already produced but has been unable to deliver to customers. However, the coronavirus pandemic will likely continue to weigh on Boeing’s backlog in the near-term as airlines deal with sharp declines in travelers.

Benzinga’s Take: Boeing’s stock initially traded higher by 6.6% on Wednesday morning.

The 737 Max clearance was widely expected to come sometime in November, and American Airlines Group Inc (NYSE:AAL) will be the first to return to 737 Max flights by the end of December. However, with coronavirus cases spiking, Boeing investors may need to remain patient for at least several more months before the company’s order backlog starts growing once again.

Photo courtesy: pjs2005 via Wikimedia