A Boeing 737 MAX 9 taxis following a landing during a first-flight event for the company's new airplane at Boeing Field in Seattle, Washington on April 13, 2017. The MAX 9 model is almost 9 feet longer than the MAX 8
SEATTLE: Boeing Co must get the go-ahead from the U.S. aviation regulator in order to put its 737 MAX jetliner back into the air after the planemaker announced on Wednesday it had grounded the new aircraft due to an engine problem, just as it was scheduled to deliver the first one to Malindo airlines
The regulatory hurdle could push back the resumption of 737 MAX flights, a potentially serious issue for Boeing if it delays the scheduled first deliveries of the $110 million plane to airlines this month.
The delivery of a plane is a crucial step for Boeing since it receives the bulk of its payment when it turns over the aircraft keys and airlines fly their new planes home from the factory.
Boeing and engine maker CFM International must submit data to the U.S. Federal Aviation Administration and the FAA has to "review it and determine that those engines can be cleared for flight," said Jamie Jewell a spokesman for CFM, a joint venture between General Electric Co and Safran SA of France.
It was not immediately clear how long that process might take. The FAA spokeswoman said she was checking on the matter.
Boeing said it still plans to deliver the first of the planes to customers this month. It said on Wednesday it had suspended 737 MAX test flights due to a quality issue with some of the low-pressure turbine discs in the engine, known as the LEAP-1B.
The nickel-based alloy discs had a flaw from forging that could make them prone to cracking, Jewell said, adding that discs from a second supplier were not affected.
However, the FAA review applies to all LEAP-1B engines, Jewell said, not just the 30 to 40 with suspected bad parts.
"In their mind, all LEAP-1B engines are equal," she said.
KEY MONEYMAKER
Boeing has engines at the factory without the suspected parts, but CFM and Boeing "have to demonstrate to the FAA's satisfaction that the issue is not present," Jewell said.
The engines could be installed in short order once approval is granted, Jewell said.
The "suspect engines" will be shipped to CFM facilities in the United States and France for inspection and possible repair.
Safran said earlier Thursday that it expected inspections to be completed within a few weeks. "We are doing everything to ensure that the first delivery can go ahead in May," Safran Aircraft Engines' Chief Executive Olivier Andries told reporters.
The 737 MAX replaces an older version of Boeing's best-selling single-aisle aircraft, a key moneymaker for the aerospace company. The 737 MAX 8, the first version of the plane to be built, seats 162 passengers in a typical two-class configuration.
Boeing had been set to deliver the first 737 MAX on Monday to Malindo Air of Malaysia.
Boeing has built up an inventory of planes outside its Renton, Washington, factory, and at a nearby Seattle airport known as Boeing Field. Reuters counted 23 Boeing 737 MAX airplanes at the facilities this week, excluding test aircraft.
The 737 MAX 8 carries a list price of $110 million but typically sells at a steep discount.
Earlier Reuters reported that France's Safran said inspections of new-generation LEAP engines supplied to Boeing
The French engine maker is scrambling to transport dozens of engine turbines back from the United States, only days before Boeing had been due to start deliveries of the new 737 MAX.
Boeing said on Wednesday that it was suspending 737 MAX test flights while CFM International, an engine venture co-owned by Safran and General Electric, conducted checks after a quality problem was found in a turbine disc.
The problem is not related to the part's design and does not suggest deeper problems in the industry's tightly stretched supply chain, Safran Aircraft Engines' Chief Executive Olivier Andries told reporters.
"There will be a temporary disruption to the logistics, which we hope to fix within a few weeks," said Andries at a French factory where production is being ramped up to meet demand for the LEAP engine. A similar factory is based in Ohio.
The LEAP-1B engine is produced for Boeing. A LEAP-1A model made for Airbus A320neo jets is not affected, Andries said.
CFM's shareholders said last month that between 450 and 500 LEAP engines are expected to be delivered this year rather than the previously stated 500.
Andries said production of engines would not be affected because a second supplier for the same part was boosting its supplies. CFM aims to deliver "as close as possible to 500" in total for Boeing, Airbus and China's COMAC, he said.
Still, Safran's share price was dented by the renewed focus on ambitious production schedules that had previously suffered barely a glitch.
EXECUTION RISK
"Late-stage discoveries occur on many new aircraft and engine programs, and the cost impact historically has tended to be low to immaterial in our experience," said Harry Breach, analyst at wealth management firm Raymond James.
"Nonetheless, this incident highlights execution risk on the key LEAP program."
Shares in Safran, which is aiming to complete a merger with parts maker Zodiac Aerospace, fell 2.2 percent to 75.82 euros by the close, among the worst performers on a CAC-40 index down 0.3 percent.
The head of Malaysia Airlines, which has ordered 25 Boeing 737 MAX jets, said he was not worried about the engine snag. The first 737 MAX was due to be delivered next week to smaller Indonesian-owned Malaysian carrier Malindo Air.
"I don’t see it affecting at all the introduction of the aircraft," Malaysia Airlines chief Peter Bellew told Reuters on the sidelines of a CAPA airline conference in Dublin.
Despite the setback on the eve of Boeing's first delivery, Safran said it had overtaken rival Pratt & Whitney as the engine supplier for most Airbus A320neo-family jets now in service and outlined new production techniques designed to speed output.
Pratt & Whitney has had a spate of problems with its new Geared Turbofan engine but says fixes are on the way. - Reuters
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