March 18, 2019 / 10:48 AM / 3 months ago

Boeing shares fall again after probe report into FAA approval of 737 MAX

(Reuters) - Boeing Co shares fell 3 percent on Monday, after a pair of newspaper reports over the weekend raised more questions about the certification process for its 737 MAX jets before two recent deadly crashes.

FILE PHOTO: The company logo and trading informations for Boeing is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 13, 2019. REUTERS/Brendan McDermid/File Photo

A Wall Street Journal report on Sunday said the U.S. Transportation Department was probing the Federal Aviation Administration’s (FAA) approval of the 737 MAX and in particular its anti-stall (MCAS) system.

The Seattle Times separately reported that Boeing’s safety analysis of a new control system known as MCAS (Maneuvering Characteristics Augmentation System) had crucial flaws, including understating power.

The paper also said U.S. FAA followed a standard certification process on the MAX rather than extra inquiries.

“Boeing (will face) a lot more scrutiny of its processes than it has seen previously,” Richard Safran of Buckingham Research said.

“The Inspector General of the U.S. Transportation Department is going to be looking for any issues with respect to how management handled the certification process.”

Shares of the company have declined about 10 percent since the March 10 Ethiopian crash that killed 157 people, wiping nearly $25 billion off its market capitalization, according to Refinitiv data.

Ethiopia said on Sunday that the crash of the Ethiopian Airlines plane had “clear similarities” with October’s Lion Air crash.

The U.S. Transportation Department’s inquiry, which was launched in the wake of the accident in October that killed 189 people, has warned two FAA offices to safeguard computer files, the WSJ reported.

“The FAA will be called on the carpet for its role in the certification process and any contribution to the MCAS issue,” Safran said.

Last Monday, Boeing said it would deploy a software upgrade to the 737 MAX 8, hours after the FAA said it would mandate “design changes” in the aircraft by April.

Boeing’s shares were down 2.8 percent at $369.20 in early trading, making them the biggest drag on the Dow Jones Industrial Average.

Reporting by Sanjana Shivdas in Bengaluru; Editing Patrick Graham, Bernard Orr

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