MAX begynner på kritiske tester i forbindelse med sertifisering - Curt Lewis

Le Bourget 2017 - Foto: Per Gram

Boeing 737 MAX certification flight tests to begin on Monday - sources

SEATTLE/WASHINGTON (Reuters) - Pilots and test crew members from the U.S. Federal Aviation Administration and Boeing Co are slated to begin a three-day certification test campaign for the 737 MAX on Monday, people familiar with the matter told Reuters.

The test is a pivotal moment in Boeing's worst-ever corporate crisis, long since compounded by the novel coronavirus pandemic that has slashed air travel and jet demand.

The grounding of the fast-selling 737 MAX in March 2019 after two crashes in five months killed 346 people in Ethiopia and Indonesia triggered lawsuits, investigations by Congress and the Department of Justice and cut off a key source of Boeing's cash.


The FAA confirmed to U.S. lawmakers on Sunday that an agency board had completed a review of Boeing's safety system assessment for the 737 MAX "clearing the way for flight certification testing to begin. Flights with FAA test pilots could begin as early as tomorrow, evaluating Boeing's proposed changes to the automated flight control system on the 737 MAX."

After a preflight briefing over several hours, the crew will board a 737 MAX 7 outfitted with test equipment at Boeing Field near Seattle, one of the people said.

The crew will run methodically scripted mid-air scenarios such as steep-banking turns, progressing to more extreme maneuvers on a route primarily over Washington state. The plan over at least three days could include touch-and-go landings at the eastern Washington airport in Moses Lake, and a path over the Pacific Ocean coastline, adjusting the flight plan and timing as needed for weather and other factors, one of the people said.

Pilots will also intentionally trigger the reprogrammed stall-prevention software known as MCAS faulted in both crashes, and aerodynamic stall conditions, the people said.

Boeing declined to comment.

The FAA email said the testing will last several days and "will include a wide array of flight maneuvers and emergency procedures to enable the agency to assess whether the changes meet FAA certification standards."

It added the "FAA has not made a decision on return to service" and has a number of additional steps before it can clear the plane to do so.

The rigors of the test campaign go beyond previous Boeing test flights, completed in a matter of hours on a single day, industry sources say.

The tests are meant to ensure new protections Boeing added to MCAS are robust enough to prevent the scenario pilots encountered before both crashes, when they were unable to counteract MCAS and grappled with "stick shaker" column vibrations and other warnings, one of the people said.

Boeing's preparation has included hundreds of hours inside a 737 MAX flight simulator at its Longacres facility in Renton, Washington, and hundreds of hours in the air on the same 737 MAX 7 test airplane without FAA officials on board.

At least one of those practice flights included the same testing parameters expected on Monday, one of the people said.

After the flights, FAA officials in Washington and the Seattle-area will analyze reams of digital and paperwork flight test data to assess the jet's airworthiness.

Likely weeks later, after the data is analyzed and training protocols are firmed up, FAA Administrator Steve Dickson, a former F-15 fighter pilot who has promised the 737 MAX will not be approved until he has personally signed off on it, will board the same plane to make his assessments, two of the people said.

If all goes well, the FAA would then need to approve new pilot training procedures, among other reviews, and would not likely approve the plane's ungrounding until September, the people said.

That means the jet is on a path to resume U.S. service before year-end, though the process has been plagued by delays for more than a year.

"Based on how many problems have been uncovered, I would be stunned if the flight tests are 'one and done,'" said another person with knowledge of the flight plans.

Regulators in Europe and Canada, while working closely with the FAA, will also conduct their own assessments and have pinpointed concerns that go beyond the FAA. They may require additional changes after the 737 MAX is cleared to return to service.

"This is new territory," said one industry source with knowledge of prior Boeing tests. "There's a lot more play between regulators, and certainly a lot more pressure and public attention."

Boeing Finally Admits That Aircraft Demand Is Basically Zero


The aerospace giant has dramatically reduced its 2020 production plans for the 737 MAX.

Six months ago -- before the COVID-19 pandemic -- Boeing (NYSE:BA) announced that it would suspend 737 MAX production in January. Its top-selling plane had been grounded since March 2019, following a pair of fatal accidents. Due to Boeing's decision to continue building the 737 MAX while waiting for regulators to recertify the model, the company had built up an inventory of about 400 undelivered 737 MAX jets and was running out of places to store them.

Since then, aircraft demand has plummeted, as the COVID-19 pandemic caused global air travel to dry up. Nevertheless, Boeing restarted 737 MAX production in late May, with plans to ramp up output gradually over the remainder of the year.

Given that few (if any) airlines want new planes right now, this decision didn't make much sense. It didn't take long for Boeing to come to its senses, though. Recently, the company told a major 737 MAX supplier to virtually halt production again.

Boeing and a key supplier manage output
Spirit AeroSystems (NYSE:SPR) is arguably the most important supplier to the 737 MAX program. The company (which was spun off from Boeing in 2005) builds the fuselage for each 737 MAX, along with other components like engine pylons and thrust reversers.

For most of 2019, Spirit AeroSystems built 737 MAX shipsets at a rate of 52 per month: even after Boeing reduced its own output to 42 per month. However, once Boeing decided to suspend 737 MAX production temporarily in 2020, it was clear that Spirit would have to slow its production rate. In early February, the partners agreed that Spirit AeroSystems would deliver 216 737 MAX shipsets to Boeing during 2020: an average of just 18 per month. This was part of a broader plan to restart production ahead of an expected mid-year recertification of the 737 MAX.

At that time, most people had no idea that COVID-19 would turn into a global pandemic. As global air travel plummeted in the following months, it became obvious that Boeing's production plans (and, by extension, Spirit's production plans) were unrealistic.

This forced the companies to renegotiate their production agreement. In early May, Boeing and Spirit AeroSystems agreed that the latter would deliver a total of 125 737 MAX shipsets during 2020, including some that had already been delivered.

Production estimates are plunging again
The International Air Transport Association currently estimates that global passenger air traffic will remain more than 25% below 2019 levels in 2021. With demand depressed to that extent, most airlines have far more aircraft than they will need over the next year. Some carriers are still willing to take new jets for one reason or another, but Boeing has less leverage than Airbus for forcing customers to take the aircraft they have ordered. Delivery delays mean that many 737 MAX buyers have the right to cancel certain orders.

As a result, Boeing has finally realized that its plan for a slow ramp-up in 737 MAX production this year was still too aggressive in light of demand. Earlier this month, Spirit AeroSystems announced that on June 4, Boeing had directed it to pause work on four 737 MAX shipsets and avoid starting work on 16 others. Spirit said that it expected that Boeing would ultimately tell it to reduce 2020 output by more than the 20 shipsets affected by the June 4 letter.

Sure enough, Spirit AeroSystems revealed last week that it will now build just 72 shipsets for the 737 program in 2020, of which 35 have already been delivered. This implies a significant cut to Boeing's own production plans for the next six months.


Another warning sign
Entering this year, Boeing stock traded for more than $300. In the "panic" phase of the COVID-19 market sell-off, the stock briefly crashed below the $100 mark, but it recovered strongly in late May and early June. Even after a recent pullback, Boeing shares have been trading for around $170, putting the company's market cap near $100 billion.

At that price, Boeing isn't a good stock for investors to buy. The aerospace giant burned $4.7 billion of cash in the first quarter, and cash burn could accelerate in the near term as Boeing starts to feel the full impact of the pandemic. While the company recently issued $25 billion of bonds, giving it plenty of liquidity for the foreseeable future, that new debt has pushed its total borrowings to nearly $64 billion.

Looking ahead, Boeing will continue to incur massive costs related to the 737 MAX crashes and the subsequent grounding. It also appears that foreign regulators will demand costly design changes. Meanwhile, Boeing may need to increase financial support to critical suppliers to ensure that they're still around when it wants to ramp up production again.

In short, the pain is just beginning for Boeing. Unless the stock price falls significantly or air travel demand quickly recovers to near 2019 levels, this is one stock investors should avoid.