The FAA posted its proposed airworthiness directive on Monday designed to make the Boeing 737 MAX return to air safely. The 36-page document is now open for public comment for 45 days, as expected. The “notification of proposed regulationsNot many surprises, but investors will want to know what’s inside.
The Airworthiness Directive, or AD, would require Boeing (ticker: BA) to install new flight control software. MCASShort for maneuvering augmentation systems, the flight control software is involved in two deadly MAX crashes responsible for 346 deaths and the global grounding of the aircraft.
Much of what Boeing has worked on has to do with MCAS solutions. The proposed changes are intended to ensure that MCAS is never incorrectly activated again.
In addition to incorrect activation, the new flight control system will limit the amount of changes MCAS can make in flight.
The FAA requires Boeing to update the Operations Manual. This is designed to ensure pilots are aware of sensor data or systems they may encounter in an emergency. MCAS and its activities were not sufficiently disclosed in the flight manual in its original iteration.
There are other changes that will be included in the guide in addition to more MCAS disclosures. Many changes will update checklists and procedures that must be followed when an extraordinary condition is observed.
New MAX display system
A new display and software package will generate an attack angle for disagree. Incorrect angle of view data, entry into flight control systems due to faulty sensors, activated MCAS, catalytic events ending in tragedy. The FAA wants to ensure that there is no confusion about sensor data in the future.
MAX operators will also need a new angle of view sensor test.
The FAA requires changes to the horizontal stabilizer trim wire routing installations. The horizontal stabilizer is essentially the rear wing that can move up or down to adjust the angle of an airplane. This change does not affect procedures involving manual adjustment of the tail wing position – something discussed during the grounding of the aircraft. Instead, it takes wiring to new standards.
Pilot training requirements are not part of the proposed Directive. They will come later. The FAA is evaluating new training in consultation with other global aviation regulators.
Is all this good news or bad news for Boeing shares?
The proposed changes were frankly expected. The process has taken a long time, but progress is being made. Progress is good for the stock. However, the MAX is the second major issue the company has recently faced.
Coronavirus is number one. Boeing shares are still down about 50% to date due to COVID-19 and its impact on commercial air travel. All aerospace stocks have been hit harder than most stocks in the S&P 500 or Dow Jones Industrial Average.
Recommissioning the MAX is important, of course, but most investors always do expected the plane to eventually re-enter service. After the MAX returns, investors will focus on one vaccine against coronavirus, which could take people to planes.
Boeing’s stock rose 2.7% on Monday, trading about shortly after the publication of the FAA report. Shares in premarket trading rose about 0.2% on Tuesday.
Write to Al Root at email@example.com