Boeing 737 MAX-7 Certified by FAA, Lifting Shares Over 5%

The U.S. Federal Aviation Administration (FAA) on Monday certified the Boeing 737 MAX-7, a key regulatory approval that allows the planemaker to begin production and delivery of the aircraft. The news sent Boeing (BA) shares up sharply, closing more than 5% higher in afternoon trading.

A Lengthy Certification Process

The FAA issued an amended type certificate for the MAX-7 following a rigorous safety and technical review that spanned nearly a decade. The certification came years later than Boeing's original target of late 2022, a delay caused by the regulator's extensive assessments and requirements for additional design modifications.

The agency mandated several changes based on the Aircraft Certification, Safety, and Accountability Act and recommendations from the National Transportation Safety Board. These included:

• A redesigned engine anti-ice system to prevent overheating.
• Updated flight-control software.
• An enhanced flightcrew alerting system.

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The FAA stated its inspectors will remain at Boeing's manufacturing facilities to oversee production and monitor the company's safety management systems as it ramps up manufacturing of the new model.

Market Impact and Outlook

The approval is a significant milestone for Boeing, allowing it to start delivering the aircraft to customers. In a statement, the company said it is preparing to deliver the first 737 MAX-7 to its launch customer, Southwest Airlines. According to aviation analytics firm Cirium, Boeing has already assembled approximately 30 MAX-7 aircraft that are awaiting delivery.

With the MAX-7 now certified, investor focus will shift to the larger 737 MAX-10. FAA officials have previously indicated that certification for the MAX-10 is expected to follow the MAX-7's approval. The MAX-10 is a crucial part of Boeing's product line, representing more than 28% of the company’s outstanding 737 MAX order backlog.