Commercial aircraft manufacturer Boeing has a new challenge in efforts restore its grounded 737 MAX fleet back into operational status. Earlier this week, The U.S. Federal Aviation Administration (FAA) notified the manufacturer of intent to inspect and sign off on every jet individually before delivery to customer airlines.

From our Supply Chain Matters lens, such a development has a significant impact on associated supply networks, since restoring the entire global operating and in temporary storage fleet could take far more time than originally estimated by BoeingBoeing 737 production line

The move denied the manufacturer of the longstanding practice to perform pre-delivery safety checks and signoffs of aircraft on its own, and an implication that the FAA is under global pressure to reinstate its own global reputation for being an independent watch dog of aircraft safety and airworthiness.

According to various business and industry media reports, the move it expected to add additional weeks for both FAA and foreign based air safety regulators to complete associated changes in testing, pilot training and certification status. Again, from our lens, it adds a new constraint, the available manpower of various FAA and global regulators in completing the process.

According to a published report from The Wall Street Journal, a letter sent to Boeing had indicated that going forward: …the FAA will have sole authority “to issue airworthiness certificates and export certificates” for all 737 MAX models. Without such paperwork, airlines typically won’t pay Boeing for delivering jets.”

Such an impact has notable implications for various 737 MAX suppliers in that their payments are somewhat dependent on Boeing’s ability to receive timely payments for aircraft delivered. With a current estimate of excess of 300 newly produced aircraft in temporary storage awaiting required flight control software upgrades and consequent air worthiness certificates, the process of returning the entire fleet of such temporarily parked aircraft can take additional months. Once more, it further brings into perspective whether Boeing will be forced to exercise an additional temporary cutback in the aircraft’s monthly production schedule in an effort to buffer the cash flow drain.

Blog readers may recall that Boeing’s ongoing communication to investors was an estimate that the MAX can be returned to air worthiness by the end of December.

Finally, it is worth noting that the reputation of Boeing itself continues to face erosion. Beyond the ongoing 737 MAX, business media headlines continue to point to aircraft safety concerns with the 737 NG model’s pickle-fork assemblies, requiring ongoing inspections of the global operating fleet, and this week, a report that in initial testing of the newly designed 777X aircraft, a test procedure resulted in a blowout explosion involving a piece of the fuselage of the aircraft. That places a renewed emphasis on the critical role that the announced Board level Safety Committee must provide for the manufacturer.

These latest developments collectively portend some difficult decisions having to be made by the manufacturer’s senior management during the coming weeks.

 

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