The Federal Aviation Administration (FAA) has mandated inspections of 2,600 Boeing Co.
What Happened: The FAA has ordered inspections of 737 airplanes, including the MAX and Next Generation models, Reuters reported on Tuesday. This decision was triggered by several reports of passenger service unit oxygen generators shifting out of position, which could hinder the supply of supplemental oxygen to passengers during a depressurization event.
On June 17, Boeing issued a bulletin to airlines calling for visual inspections. The company stated that it had instructed airlines to update a subset of the restraining straps on 737 oxygen generators. This was in response to a new adhesive introduced in August 2019 that, under certain circumstances, allowed units to shift up to three-quarters of an inch.
"We have gone back to the original adhesive for all new deliveries to ensure the generators remain firmly in place, as intended," Boeing announced. The company added that inspections of the in-service fleet and undelivered airplanes have not identified any units that failed to operate properly.
The FAA's airworthiness directive is effective immediately and requires inspections and corrective actions, if needed, within 120 to 150 days based on the 737 model. The FAA is also prohibiting airlines from installing potentially defective parts. Airlines must conduct a general visual inspection and replace oxygen generators, strap thermal pads, and reposition impacted oxygen generators if necessary.
Why It Matters: This directive comes on the heels of Boeing's plea deal with the Department of Justice (DOJ) over allegations of misleading the FAA regarding the safety of its 737 MAX. The company agreed to pay up to $487.2 million in criminal fines and spend at least $455 million to enhance its compliance and safety programs over the next three years.
Despite the guilty plea, experts predict minimal impact on Boeing's stock price, credit rating, and U.S. government revenue.
