Boeing stock falls 2.9% as FAA orders more 737 Max changes

By Alan Levin, Julie Johnsson and Christopher Jasper / Bloomberg News

Boeing stock tumbled 2.9% Thursday after tests on the 737 Max revealed a new safety risk that prompted U.S. regulators to order additional design changes to the grounded jetliner.

The Federal Aviation Administration discovered that data processing by a flight computer on the jetliner could cause the plane to dive in a way that pilots had difficulty recovering from in simulator tests, according to two people familiar with the finding who asked not to be named discussing it.

Boeing shares closed down $11.13 at $364.02 in New York, by far the worst performer in the Dow Jones Industrial Average.

While the new issue didn’t involve the Maneuvering Characteristics Augmentation System linked to the two accidents since October that killed 346 people, it could produce an uncommanded dive similar to what occurred in the crashes, according to one person, who wasn’t authorized to speak about the matter.

David Learmount, a consulting aviation-safety editor at Flight Global and a former Royal Air Force pilot, said details of the new issue are sketchy but it’s possible that it could further delay the Max’s return.

“The implication is that this is different software in a different control computer that’s presenting similar symptoms,” he said. “When you control an aircraft with computers, which we do now, you’ve always got potential for problems.”

Yet Bank of America Merrill Lynch stuck with its original time frame of a six- to nine-month delay.

“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,” analyst Ronald Epstein said in a note to clients.

Southwest Airlines, meanwhile, will keep the Max out of its flight schedule at least through Oct. 1, a month more than previously planned, as safety regulators debate when the grounded aircraft will be approved to resume operations.

The extension will force the continued cancellation of 150 daily flights, Southwest said in a statement Thursday. The Dallas-based carrier, the biggest customer of the Max, made the decision just two weeks after delaying the plane’s expected return to early September from a prior plan of early August.