Boeing Co (NYSE: BA) is committing to work on a redesign of engine inlets and engine fan cowls on its older generation 737s at the urging of federal regulators.
The move follows a recommendation from the National Transportation Safety Board, which said the redesign is needed to avoid incidents like one that killed a passenger on a Southwest Airlines Co (NYSE: LUV) flight last year.
The fan blade break that caused that accident in April 2018 isn’t as likely to occur again, as changes are already underway in how fan blades are inspected.
But it was another difficult piece of news raising the level of scrutiny of the Chicago-based plane maker, which is still working through a fix for a different jet, the newer 737 MAX aircraft, that remains grounded after two mass casualty accidents in a five-month span.
First US Airline Fatality In Nearly A Decade
The 2018 incident involved a cracked fan blade that went undetected by routine maintenance checks. The blade broke off and hit the engine case, sending debris into the fuselage, where it broke out a window, causing the passenger’s death. The plane, en route from New York to Dallas, then made a safe emergency landing in Philadelphia.
The accident resulted the death of Jennifer Riordan, a 43-year-old banker and mother from Albuquerque who was almost sucked out after the debris broke a hole in the plane. It was the first fatality on a U.S. airline flight in almost a decade.
Since then, the FAA has required more advanced fan blade inspections, using ultrasound and electric current instead of just visual checks, on certain engines made by CFM International, a joint venture of General Electric Company (NYSE: GE) and Safran ADR (OTC: SAFRY).
Those more careful checks turned up other blades with cracks.
The NTSB suggested — and Boeing agreed — that the companies need to make design changes to the engine inlet and the covering of the fan to make it more likely they would withstand a fan blade break even if it were to occur.
The board also recommended retrofitting of many older Boeing 737s with the redesigned engine-covering part. The overall order affects about 7,000 737 NGs.
'Does Not Affect 737 MAX'
“Once approved by the FAA, that design change will be implemented in the existing NG fleet over the longer term,” Boeing said in a statement. “This issue is limited to the 737 NG and does not affect the 737 MAX.”
The distinction is one Boeing is eager to highlight, undoubtedly fearful that headlines over the 737 NG issue may be conflated with the ongoing questions about the safety of the 737 MAX, which was grounded over a separate issue involving flight control software and warning systems.
It also comes as Boeing is dealing with the need to make repairs on cracks on another part of the aircraft, the pickle fork, at an estimated $275,000 per plane.
A fatal engine failure putting Boeing front and center again as the NTSB calls for a redesign of the company's 737 NG planes. @Lebeaucarnews breaks down the latest leg of the $BA saga and the traders discuss what lies ahead. pic.twitter.com/SM26V8N42j
— CNBC's Fast Money (@CNBCFastMoney) November 19, 2019
In the meantime, “all 737 NGs are safe to continue operating normally as the issue is completely mitigated by the fan blade inspections,” Boeing said.
FAA Proposes $3.9M Fine Over Additional 737 Issues
The FAA proposed a civil penalty of more than $3.9 million on Dec. 6 against Boeing for what the agency said was the installation of noncoforming components on about 133 aircraft that Boeing then said were ready for airworthiness certification.
A lack of quality oversight of suppliers led to the installation of slat tracks on the leading edge of Boeing 737 wings that were weakened by hydrogen embrittlement, the FAA said.
A Boeing spokesman told Reuters that the manufacturer is "working closely with our customers to take the appropriate corrective actions." The jetmaker has 30 days to either pay or challenge the fine.
Boeing shares were down 1.31% at $343.34 at the time of publication Wednesday.
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Photo by Bernal Saborio via Wikimedia.
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