The FAA has, after a 20-month grounding, has approved the modifications to the Boeing 737 that will enable it to re-enter service in the US as soon as airlines and their modified aircraft are ready. American Airlines has scheduled a MAX flight on December 29th, while Southwest is waiting for all of its pilots to be trained and won’t likely bring the aircraft back before March. Other domestic airlines are likely somewhere in between. International approvals are also expected to occur over the next few days and weeks.

What Boeing now faces are two remaining constraints: One is simulator capacity to train all of the pilots with a two-hour simulator training requirement. The second constraint is that the FAA stripped Boeing of its production certificate for the MAX, and hasn’t yet restored it.

Simulators

We simply don’t have enough simulators in the world to train all pilots on a timely basis, despite CAE and others producing simulators as fast as they can. For example, Southwest has 9,000 pilots it needs to train. At 2 hours each, and 15 minutes between to reset and transition between sessions, operating 24 hours per day, each simulator can train 11 pilots per day. Southwest needs 818 simulator days to complete the retraining. At last check, they had nine simulators, and it will take a calendar quarter using them 24 hours a day to train their pilots, which is why they won’t begin flying the until the second quarter.

The simulator constraints could impact the timing of return to service for some carriers who lack simulator capacity and need to compete with other airlines for the use of third party facilities. The simulator manufacturers are working overtime to pump out as many as possible in the near term to address the short-term training bubble and long-term recurrent training needs.

Production Certificate

A production certificate from the FAA enables a manufacturer to build and self-certify aircraft under designated authority because its systems and processes were robust enough that safety issues would be unlikely. That has been the case with all Boeing aircraft for many years, but concerns with the caused the FAA to pull the certificate. Boeing needs it back if it is going to ramp-up production rates to match its competitor, Airbus.

The latter point has major implications. First, the 450 or so aircraft that were already built will need to be modified and inspected and certified on an airplane by airplane basis by the FAA. Plus, until Boeing can regain its certificates, the FAA will need to inspect and approve every new coming off the line until it can regain the confidence of the FAA. The FAA isn’t staffed for high volumes, and this will constrain Boeing’s throughput.

The loss of the production certificate stems from quality issues that emerged on some of the aircraft that were built and stored in parking lots across several Boeing facilities. Foreign objects, including rags, were found in fuel tanks, a sign of carelessness. Boeing had already been fined by the FAA for similar quality problems on the that violated a prior agreement, and the FAA remains concerned about manufacturing quality. Loss of their production certificate would have been unthinkable at Boeing over the last six decades, but that is how serious problems have become internally at the company.

We estimate that it will take Boeing about 50-100 new aircraft being built to regain the production certificate – which will take a few months. In the interim, Boeing will need the FAA to sign off on each of the 450 aircraft that have been built individually as well as all new production aircraft built until the certificate is restored. That will be time consuming and increase short-term costs for Boeing.

The airplane may now be cleared for service, but Boeing still hasn’t been cleared to mass produce it until the FAA is satisfied that its quality control processes are once again sound. There’s still a lot of work to be done in Seattle.

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