China today allowed the Boeing 737 MAX to resume service after making a series of safety adjustments. Chinese authorities’ decision has removed an uncertainty surrounding the American aviation giant’s comeback after a lengthy slump.
Friday’s directive from the Civil Aviation Administration of China (CAAC) deeming the model “airworthy” sets the stage for the jet to return to airline schedules in the country next year, following months of negotiations between Beijing and Boeing.
Soon after this development, Boeing shares finished with a gain of 7.5 percent at $202.38, the biggest winner in the Dow. The decision also clears the way for Boeing to deliver more than 100 MAX aircraft to Chinese carriers that were produced during the more than two years the plane was grounded in China following two deadly crashes.
The CAAC said that it expects “commercial operation of the existing domestic fleet will be resumed progressively at the end of this year or early next year.”
The CAAC’s move also confirms a place for the US plane maker in the country – an essential growth market in aviation – despite persistent trade and political tensions between Washington and Beijing.
“This will give Boeing the assurance to begin to ramp plane production back up,” said Michel Merluzeau, an analyst at AIR consultancy, adding that the action amounts to the “light at the end of the tunnel” for the MAX.
Faulty flight landing system
China is the last major travel market to bring the MAX back into use after it was grounded globally in March 2019 following two crashes that together claimed 346 lives.
Investigators said the main cause of both tragedies was a faulty flight handling system known as the Maneuvering Characteristics Augmentation System (MCAS).
Boeing won approval from the United States in November 2020 and from most other leading aviation authorities soon after to resume service.
But the process was far more protracted in China, with the CAAC only conducting a test flight of the model in the third quarter of this year.
Analysts said delays may have been a consequence of tensions with Washington.
But on Thursday, Chinese authorities gave the green light after requiring upgrades to planes, including installing new software programs to address the defect and updating the flight manual.