Exactly one month ago, Boeing stock soared despite the company's dismal earnings because it claimed that 737 MAX deliveries "could" resume in December. We mocked the headfake at the time for the simple reason that not only was the MAX not coming back this year, but it may well never come back now that Boeing has seen its consumer faith crushed after it emerged it had put the bottom line above passenger safety.
Well, moments ago the Dow Jones Index dipped, when Boeing stock - by far its most influential member - slumped 1% after FAA Administrator Stephen Dickson told CNBC that Boeing‘s timeline isn’t FAA’s timeline, and that the MAX' certification would extend in 2020, meaning the plane would not return to operation this year.
Predictably, BA stock slumped even if the move was far less than its surge on Nov 11 on the now refuted rumor the MAX would come back.
There's a reason for the FAA's caution: earlier today the WSJ reported that U.S. regulators decided to allow the 737 MAX jet to keep flying after its first fatal crash last fall, despite their own analysis "indicating it could become one of the most accident-prone airliners in decades without design changes."
The November 2018 internal Federal Aviation Administration analysis, expected to be released during a House committee hearing Wednesday, reveals that without agency intervention, the MAX could have averaged one fatal crash about every two or three years, according to industry officials and regulators. That amounts to a substantially greater safety risk than either Boeing Co. or the agency indicated publicly at the time.
The assessment and related materials raise new questions about the FAA's decision-making in the wake of the Lion Air crash in Indonesia, along with what turned out to be faulty agency assumptions on ways to alleviate hazards.
The FAA's intervention proved inadequate after a second fatal MAX crash, this time in Ethiopia, put the global fleet on the ground and sparked an international controversy over the agency's safety oversight.
And as public outrage is sure to return at both the FAA and Boeing, one can forget about the 737 MAX return to operation any time soon, and perhaps, any time ever.