FAA says Boeing needs to mitigate a 'potential risk' in 737 Max before grounding order can be lifted

Key Points
  • The issue was discovered during a simulator test last week, Reuters reported.
  • Shares of the aerospace company dropped more than 1% following the news, but closed the day up.
Boeing parks dozens of planes on tarmac, parking lots while fixing 737 Max
Boeing parks dozens of planes on tarmac, parking lots while fixing 737 Max

The Federal Aviation Administration said on Wednesday that it has found an issue with the Boeing 737 Max that the manufacturer must address before it lifts the national grounding order.

The FAA has asked Boeing "to address, through the software changes to the 737 Max that the company has been developing for the past eight months, a specific condition of flight, which the planned software changes do not presently address," Boeing said in a securities filing on Wednesday. "Boeing will not offer the 737 Max for certification by the FAA until we have satisfied all requirements for certification of the MAX and its safe return to service."

"The FAA is following a thorough process, not a prescribed timeline, for returning the Boeing 737 Max to passenger service. The FAA will lift the aircraft's prohibition order when we deem it is safe to do so," the agency said in a statement. "The FAA's process is designed to discover and highlight potential risks. The FAA recently found a potential risk that Boeing must mitigate."

The delay could cause additional delays for airlines eager to get the planes back in service. Carriers including United, American and Southwest have removed the aircraft from their schedules until after Labor Day and have had to cancel thousands of flights during the peak summer travel season.

A source close to the investigation told NBC News that FAA pilots found an issue during a simulation last week of the Maneuvering Characteristics Augmentation System (MCAS). The system took too long before allowing the pilots to recover control of the plane.

The 737 Max has been grounded since March after two deadly crashes involving the plane. Regulators around the world have pointed to a software issue as a potential cause of the accidents.

Boeing has traced the issue to a microprocessor and how the chip handles data, NBC News reported. The company believes it can address the issue with a software code update.

"The safety of our airplanes is Boeing's highest priority. We are working closely with the FAA to safely return the Max to service," a company spokesperson said in a statement to CNBC.

Global airlines on Thursday urged regulators to coordinate on technical requirements and timelines for the safe re-entry to service of the 737 Max.

In a statement a day after hosting a meeting of 40 airlines, regulators and others in Montreal, the International Air Transport Association also called for global alignment on additional training requirements for 737 Max flight crew.

Reuters and NBC News contributed to this report.