Markets

Boeing shares fall as company says new 737 Max issue will delay return to flight for months

Key Points
  • Pressure on Boeing's stock has mounted since the FAA said it had found a new issue with the 737 Max aircraft.
  • An international aviation body said U.S. regulators need to work on returning the Boeing 737 Max in step with international regulators, as "aviation cannot function efficiently without this coordinated effort."
  • In a note to investors, Bank of America calls the announcement another "software hiccup" for Boeing but "not all that surprising."
Boeing parks dozens of planes on tarmac, parking lots while fixing 737 Max
VIDEO1:0601:06
Boeing parks dozens of planes on tarmac, parking lots while fixing 737 Max

Boeing shares fell Thursday after an international aviation body added pressure on the company to coordinate 737 Max pilot training for all regulators and airlines around the world, asking for an "alignment on additional training requirements for Boeing 737 MAX flight crew."

Additionally, a Boeing official told CNBC's Phil Lebeau that a new issue identified by the FAA will require several additional months of work on the 737 Max. The person said that the FAA is unlikely to certify the 737 Max and get the plane into service before the middle October, as the fixes include both the previously identified issues with the MCAS software as well as the recently disclosed software issue disclosed on Wednesday.

Boeing shares fell 2.9% in trading Thursday to close at $364.02. The stock had fallen as far as 6.9% in premarket but regained some lost ground.

Source: Boeing looking to have 737 Max fix by September
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Source: Boeing looking to have 737 Max fix by September

The statement from the International Air Transport Association came after the Federal Aviation Administration said Wednesday it found another software issue with the company's grounded 737 Max aircraft. While the international aviation body said it trusts the FAA, it said U.S. regulators need to work in step with international regulators, as "aviation cannot function efficiently without this coordinated effort." The IATA's statement followed its summit in Montreal about the 737 Max, with representatives of over 40 airlines, regulators and other companies attending.

"The Boeing 737 MAX tragedies weigh heavily on an industry that holds safety as its top priority," IATA Director General and CEO Alexandre de Juniac said in a statement Thursday. "Aviation is a globally integrated system that relies on global standards, including mutual recognition, trust, and reciprocity among safety regulators."

Pressure on Boeing's stock has mounted since Wednesday afternoon, when the FAA said it had found a new issue with the 737 Max aircraft.

"The FAA's process is designed to discover and highlight potential risks. The FAA recently found a potential risk that Boeing must mitigate," the agency said in a statement.

In a note to investors, Bank of America called the announcement another "software hiccup" for Boeing but "not all that surprising."

"Given that the FAA is reviewing a complex software/hardware system in a thorough manner, we would expect to see some back and forth before a final software/hardware package is determined," Bank of America said.

With the new delay, the best-case scenario for the first certification flight of the 737 Max is the second week of July, according to Reuters. But Bank of America said it expects to see the 737 Max grounded for an additional six to nine months.

Boeing disclosed in a filing with the SEC that this new issue was not covered by the changes it had planned for MCAS, a software system that has been the focus of regulators after two 737 Max airplanes crashed since October, killing 346 people. The new software issue is reportedly separate from the changes Boeing is making to MCAS, according to The Wall Street Journal. The report said this software system is a part of the emergency process that pilots would use to address an MCAS malfunction.

– CNBC's Michael Bloom contributed to this report.