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Boeing 737 Max deemed safe to fly again by European regulator

"Boeing’s grounded 737 MAX aircraft is safe to fly again, according to the the head of the European Union Aviation Safety Agency. Yahoo Finance’s Emily McCormick joins Akiko Fujita to discuss."

Video Transcript

AKIKO FUJITA: Shares of Boeing seeing a pop in the session. The stock up nearly 3% right now, after European regulators gave the go-ahead to fly its 737 Max jets again. Those planes have been grounded since March of last year, following those two accidents that left 346 people dead. Let's bring in Emily McCormick for the very latest on this story. And Emily, what kind of timeline are we talking about in terms of when these jets are likely to return to the skies, at least in Europe?

EMILY MCCORMICK: Absolutely, Akiko. So taking a look at this report, we had the European Union Aviation Safety Agency saying in an interview with Bloomberg, that it's finishing up final document reviews and preparing to issue an airworthiness directive for the 737 Max, potentially as soon as next month. Now this is the biggest vote of confidence that Boeing has received from a major aviation regulator yet.

Now the agency conducted test flights on the 737 Max back in September. And again, a huge endorsement, given that this aircraft has been grounded globally since March 2019. Now at the same time, the agency also suggested that Boeing could return to the skies in the region before the end of 2020. The company has not yet implemented a software upgrade that the agency requested, though this would reportedly be required on the forthcoming Max 10 aircraft, which is slated to debut in 2022.

Now the head of that agency, Patrick Ky, did tell Bloomberg in that interview that the agency's analysis still found that the level of safety reached on the 737 Max jet was high enough to warrant a return to the skies, even an absence of this additional software. Now the FAA, turning back to the US now, the FAA has also been conducting a review of the 737 Max. It hasn't provided any sort of concrete timeline on when an airworthiness directive for the United States might actually be coming.

We know that the FAA Chief, Steve Dickson, actually flew the Max back in September, along with regulators in Europe. He did say that the plane's controls felt quote, "very comfortable," according to reports out of that analysis. But still, that review process is not yet complete. And again, we are still in an environment where commercial aircraft demand remains relatively low, actually quite a bit lower than it was the same time last year, because of the pandemic.

But again, the possibility here that the 737 Max might be able to return to the skies before the end of 2020, at least in the EU region, is something definitely that had been weighing on the stock for the past more than a year, and something contributing to that pop we're seeing today. Akiko.

AKIKO FUJITA: Yeah, I mean, investors seem to be happy about it if you look at the stock reaction today. But to your point, how big of a bump is this likely to be for Boeing when it comes to the bottom line? This is a crisis that they've had to deal with for two years pre-COVID. They've had to deal with a number of cancelations, delays. What does this mean for that backlog now that we know at least the jets that are available to fly, can finally take to the skies in Europe?

EMILY MCCORMICK: Well, again, getting that certification from the FAA is really going to be where the unlock comes in. That's what a lot of analysts have really pointed to, especially since the FAA really does serve as that international precedent-setting agency when it comes to air worthiness directives. But at the same time, if we take a look at what Boeing has been reporting so far this year, the company reported nearly 1,000 jet orders canceled or impaired so far for the year to date. That's due to both our ongoing 737 Max grounding, as well as the pandemic.

Now if we take a look at airlines themselves though, they actually are planning on going ahead with training other pilots for the 737 Max jet, even in lieu of the fact that we're still waiting for that airworthiness directive from the FAA. We had American Airlines saying last month that it intended to have its pilots begin that training process on the 737 Max starting in November. So I think that's something else that's also contributing to this general feeling of optimism around this timeline for the Max jet, Akiko.

AKIKO FUJITA: OK, Emily, thanks so much for that.