By Eric M. Johnson and David Shepardson
SEATTLE/WASHINGTON (Reuters) - Boeing Co <BA.N> plans to separate 737 MAX wiring bundles, flagged by regulators as potentially dangerous, before the jet returns to service, two people familiar with the matter told Reuters on Wednesday.
The decision to change clusters of wiring that control key aircraft systems marks a reversal from the U.S. planemaker's initial recommendation to the Federal Aviation Administration and poses a fresh hurdle to the jet's already-delayed return to service.
The FAA and Boeing first said in early January they were reviewing a wiring issue that could potentially cause a short circuit on the 737 MAX, and in certain remote circumstances lead to a crash if pilots did not react in time.
Earlier on Wednesday, FAA chief Steve Dickson confirmed that the agency had rejected Boeing's initial proposal to leave wiring bundles in place and said the decision on next steps was up to the planemaker.
Pending final approvals from the FAA, Boeing will move to physically separate the wiring bundles before the MAX is cleared for service, two people familiar with the matter said.
Boeing does not view the retrofits as delaying the plane's estimated return to service in the middle of the year at the earliest, one of the people added. Boeing expects changes to take roughly one week per aircraft, but it will do some of the work as it goes through the process of removing aircraft from storage, he said.
Representatives for Boeing and FAA declined to comment on whether the planemaker intends to separate the wiring bundles.
Boeing has noted in talks with the FAA that the same wiring bundles are in the 737 NG, which has been in service since 1997 and logged 205 million flight hours without any wiring issues.
Boeing's 737 MAX was grounded worldwide a year ago after two crashes in Indonesia and Ethiopia killed 346 people within five months.
The worldwide safety ban wiped billions off the company's value and sparked hundreds of lawsuits from bereaved families.
Boeing has spent months updating the stall-prevention software known as MCAS linked to both crashes, but fresh issues have surfaced during intense scrutiny on the aircraft, pushing back regulators' re-approval of the plane by months.
Wiring was one such issue.
There are more than a dozen different locations on the 737 MAX where wiring bundles may be too close together. Most of the locations are under the cockpit in an electrical bay.
Boeing was already weeks into developing a backup plan in case the FAA rejected its arguments, the people said.
(Reporting by Eric M. Johnson in Seattle and David Shepardson in Washington; Editing by Cynthia Osterman and Matthew Lewis)