(Bloomberg) – European and Canadian regulators still wrestle with Boeing Co. about the latest remaining technical details of its 737 Max overhaul, prompting some customers to worry that certification could slip into critical markets outside the US for next year.
In a rare bit of good news for Boeing and its beleaguered jetline, the Federal Aviation Administration on August 3 triggered a process that could lead to re-issuance of a U.S. Airworthiness Certificate for the Max as soon as October.
However, international regulators say they are not ready to follow suit. The European Union’s Aviation Safety Agency is awaiting further clarification from Boeing on a major upgrade that needs to be carried out after the aircraft is back in the air, according to people familiar with the matter.
And Transport Canada, today’s most detailed comment, said Monday that its concerns have not been fully addressed about silently sending incorrect activation of Max’s stick shaker, which could distract pilots and add to their workload in a need.
China, the second largest aviation market in the world, has meanwhile said very little about its plan to evaluate the Max.
Winning U.S. approval through October could allow for commercial flights by the end of the year. That would allow Boeing to finally start again to generate revenue from its most popular model. The Max was grounded in March 2019 after the second of two accidents that killed 346 people.
Read more: Boeing’s 2020 gets even worse than Lost Max Orders Top 400
While the FAA, Max’s main certifying body, was always expected to be the first to cancel his return, a major time gap with Europe or China, for example, could damage the commercial boom of the jet. It could also hoard potential international airlines, such as Ireland’s Ryanair Holdings Plc as tour operator TUI AG, and slow progress towards a top Boeing priority: a return to positive cash flow.
Both Air Lease Corp., one of the largest aircraft leasing companies, and rating agency Standard & Poor’s have expressed caution about how long it will take for the jet to be approved to fly outside the US again.
International clearance could be delayed “by a few months, in part due to travel restrictions and other logistical problems caused by the coronavirus,” S&P said last week.
Angle of Attack
EASA’s concerns about the lack of a Max 737 of a third angle-of-attack sensor have not been fully addressed, said several people familiar with the matter who asked to speak anonymously about private interactions over the return of the aircraft.
The device, which checks whether an aircraft is pointing up or down relative to the approaching air, is not functioning properly in both Max crashes, causing the automated system to emit the condemned flights in a dive shot.
The FAA and EASA clashed last year over how to approach a fix, finally reaching a compromise with an upgrade to be installed by Boeing after the planes fly again. The company has proposed using existing sensors and the aircraft’s computers to synthesize the action of a third angle-of-attack sensor without the expensive hardware addition, according to people familiar with the matter.
EASA is seeking more clarity from Boeing over its timetable for making the versions after the Max reimburses the commercial service, including milestones to track progress toward implementation, two people said.
However, one person familiar with conversations about the issue said that this is not expected to stop EASA’s decision to lift the flight ban.
Boeing has said it expects the Max to receive FAA clearance in the fourth quarter.
“We continue to make steady progress toward safely returning the aircraft to service, working through the rigorous process imposed by the FAA, EASA and other authorities,” Boeing said in a statement in Chicago. “Safety remains our priority and regulators will continue to determine the return schedule for service.”
Last week, the FAA said Boeing’s redesigned software was “demonstrated compliance” with EASA requirements. But EASA signaled that there were still issues to be resolved outside of test-flight scheduling.
“Good progress has been made, but there is still some work to be done by Boeing,” EASA said, deciding to work out.
Stick Shaker
Canada, too, has signaled that it is not yet comfortable that the changes outlined by the FAA last week go far enough.
The FAA’s proposed fixes, now under a 45-day inspection period, would ensure that the safety function that malfunctioned in accidents, known as the Maneuvering Characteristics Augmentation System, can no longer trigger the repeated dives that ‘. t bring the planes down. Boeing was also required to use its flight control computer to compare readings from both angle-and-attack sensors to make pilots more aware of a failure.
On Monday, Canada reiterated its demand to address the so-called human factor discussed in the wake of a Max crash as a potential contributing factor as an array of alarms and warnings could overwhelm pilots and contribute to airline disasters .
Transport Canada wants to give pilots the option to turn off the stick-shaker – a warning mechanism that vibrates the aircraft’s control yoke – if it is incorrectly set. The regulator claims that this would reduce pilot workload and distraction.
As proposed by Boeing, the stick shaker could only be deactivated by pulling a circuit breaker, Livia Belcea, press secretary for Transport Minister Marc Garneau, said Monday. Boeing has been talking about a modification that would be installed after the plane returned to service, Belcea said.
“Transport Canada will not lift the flight restrictions on the Boeing 737 Max 8 until the department is fully satisfied that all safety concerns have been addressed by the manufacturer and the US FAA, and that improved procedures and flight crew training are in place,” Belcea said. “If deemed necessary, Transport Canada will require additional procedures and training in Canada.”
After Effects
While agreements between regulators are not uncommon, they have played out in a more public way in the wake of the 737 Max crisis. Airline regulators have historically projected a fairly uniform front, struggling to adopt more uniform rules and only rarely disagreeing on major safety issues. Regulators overseeing jetliner manufacturers – the EU, the US, Canada and Brazil – are world leaders. That atmosphere was shattered by the Max crisis, which raised questions about the FAA pointing to its reputation as the gold standard in aviation security.
Regulators have since sought to demonstrate independence. Rising nationalism over trade and other matters has not helped, while the coronavirus has also slowed cooperation.
“We hope to see Max’s FAA certifications happen this year,” Air Lease Chief Executive Officer John Plueger said in a post-earnings interview last week. “We have somewhat less confidence that certification will be achieved by the end of the year by all foreign regulators, including EASA and China.”
Brexit, Virus
A lengthy European delay combined with Brexit could potentially cause a headache for TUI, the tour with part of its fleet in the UK licensed. Following a temporary transition operation in December, the British Civil Aviation Authority will take over aircraft certification from EASA. The agency is still recruiting technical experts to conduct its own evaluations, according to a person familiar with the matter.
While no decision has been made on how the agency would handle the Max certification, the CAA would likely follow along with EASA tests, the person said. This would minimize any additional impact on TUI as other UK licensed carriers.
With much of its fleet still grounded and a focus on travel in warmer months, a certification delay would only have a significant effect on TUI if it could not get its April service up to April, TUI CEO Fritz Joussen said. That is when the Easter cruise signals the start of Europe’s travel season.
TUI declined to comment.
In a statement, the CAA said it is working closely with EASA on the Max and will be ready to take over at the end of the Brexit transition period.
Breathing room
Sure, airlines in general will not see an impact unless Max’s comeback drags on after the end of winter. The virus has shaken the traffic so low that most of the planes are not needed at the moment. And if the differences are sorted within the FAA review period, the gap with the FS may be minimal.
For Boeing, which sits on some 450 undelivered Max jets, a slower return would limit the aircraft’s capability and collect definitive payments. Some customers, such as Ryanair, are trying to speed up deliveries.
Other regions will follow the lead of Europe. Regulators in India, for example, will wait for both the FAA and EASA to recertify the aircraft before it can fly there, according to a person familiar with the matter.
Boeing announced profit on Tuesday after reporting 43 more Max cancellations. Shares were up 2.9% at 1:17 a.m. in New York, and have lost 43% this year.
Sheila Kahyaoglu, an analyst at Jefferies in New York, estimates that the company will resume Max deliveries next year, and 360 of the ashes for one-handed over for the entire 2021.
Slowdown of China
China, the second-largest aircraft market, remains a wild card. It was the first country that Max founded in 2019 and has not said much about how evaluating returns is. Political tensions have increased with the US on fronts, including a trade deal, freedoms in Hong Kong and data security.
Max customers said they did not have much insight into the process and expected the friction to slow it down. China also did not take 787 Dreamliner deliveries this year, which has been taken as a negative sign.
The government bodies primarily responsible for overseeing China’s aviation industry include the National Commission for Development and Reform, the Civil Aviation Administration of China, and the Asset Management and Administration Commission.
The three agencies did not respond to faxed questions about how China will determine the air value of the aircraft and whether it accepts domestic airlines plans to accept.
(Stock Trading Updates, fourth paragraph analyst comment under Breathing Room subheadline)
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