By David Shepardson
WASHINGTON (Reuters) -The Federal Aviation Administration will not immediately allow Boeing (NYSE:BA) to increase 737 MAX production as it addresses ongoing safety issues, its administrator said on Thursday, after a meeting with outgoing CEO Dave Calhoun and other executives.
The FAA's enhanced oversight of Boeing will continue in the coming months, with weekly meetings and quarterly exchanges between the heads of the company and the U.S. regulator. The planemaker was barred in February by the FAA from boosting production of its best-selling plane after a door panel blew out during a Jan. 5 flight on a new 737 MAX 9.
FAA Administrator Mike Whitaker said he did not expect Boeing to win approval to increase production of the MAX "in the next few months" and has had no discussions with Boeing yet about the issue.
He said the FAA would monitor Boeing over the coming months to understand its quality and safety improvements "to give us a fundamental picture of whether they are in the right zone… We want to make sure the system is running as safely as it should.”
Boeing late on Thursday released an 11-page executive summary of its improvement plan based on findings from FAA audits and feedback from employees among other sources, including six critical, safety-focused production areas it will address.
The key performance measures include employee proficiency, the number of hours to address issues, including the total number of rework hours per airplane, and supplier shortages.
Boeing said the data "will provide real-time insights into production system health, enabling the company to identify and remediate potential quality and thus potential safety hazards before they fully mature."
Production of the 737 MAX airplane is vital to the company's finances. Last week the planemaker's top finance executive said they will burn rather than generate cash in 2024 due in part to delayed deliveries.
Boeing said in a statement that its plan covers four categories including investments in workforce training and eliminating defects.
"Many of these actions are underway and our team is committed to executing on each element of the plan," Calhoun said in a statement.
The FAA said earlier that Boeing had committed to release more details of the plan "in the interest of transparency and public confidence."
Boeing shares closed up 0.6%.
737 PRODUCTION SLOWED
The three-hour meeting was Calhoun's second high-profile meeting with Whitaker this year as Boeing seeks to have costly production limits lifted by the FAA after soaring quality concerns compelled the regulator to slow its rapidly increasing 737 production schedule.
Boeing is currently producing significantly fewer than the 38 737 MAXs per month it is permitted under the FAA directive. Boeing has not requested relief from the cap and they have not even had preliminary discussions about it, Whitaker said.
Calhoun is due to leave the company by the end of the year as part of a broader management shake-up announced in the wake of the Alaska Airlines incident, but Boeing has not yet named a replacement.
The meeting included other senior Boeing leaders including Stephanie Pope, the new head of Boeing Commercial Airplanes, Boeing's head of quality Elizabeth Lund and Mike Fleming, Boeing senior vice president and general manager, airplane programs, the sources said.
Whitaker reiterated on Thursday that Boeing faces a "long road" to address safety issues.
"This plan does not mark the end of our increased oversight of Boeing and its suppliers," he said. "Regardless of how many planes Boeing builds, we need to see a strong and unwavering commitment to safety and quality that endures over time. This is about systemic change, and there's a lot of work to be done."