FAA rules the 737 MAX software glitch is not a safety issue, clearing a hurdle for the 737-10; Boeing closes at $193.57

The Federal Aviation Administration said on Friday that a flight-software flaw on some Boeing 737 MAX jets is not a flight-safety concern. The decision came from the agency's Corrective Action Review Board, which met the same day, and it removes the issue that had hung over certification of the 737-10, the largest and last uncertified model in the MAX family, CNBC reported.

The FAA said the board reached its view "because pilots retain full control of the aircraft and the indications to the flight crew are clear and unambiguous." Rather than ordering a fix, the agency will issue a special bulletin telling airlines how to recognize and respond to the problem, and said it would "consider appropriate action if it receives new information."

Boeing shares closed Friday at $193.57, up 0.7%, after trading between $190.27 and $196.88, according to Nasdaq. That is about 2% above the $189.50 they hit on Monday, when the company confirmed the flaw and the stock fell 4.3%. Shares were slightly lower in after-hours trading.

What was actually decided

The flaw sits in the flight management computer. After a missed approach, if pilots change the preprogrammed route, the automated vertical navigation mode can drop out, and crews have to take extra steps to use the automation again on the next approach. AeroTime reported that the autopilot keeps working throughout and that WestJet, which already flies jets with the affected software, has reported no in-service problems.

The ruling is narrower than it may look. It says the flaw does not have to be fixed before planes fly. It does not certify the 737-10, and the FAA's statement gave no date for that. Boeing's permanent software update was slated for 2028 when the issue surfaced, and nothing in Friday's statements changed that timeline.

Why the 737-10 is the number that matters

Boeing's 737 orders are heavily weighted toward the stretched model. As we reported last month, the 737-10 accounts for about 31% of the 737 backlog. Every month the certification slips is a month in which that slice of the order book cannot turn into deliveries and cash.

Customers waiting on it include United, Southwest, Alaska, American, Ryanair and Lufthansa Group, which exercised options for 20 more in September, AeroTime reported. Alaska alone has 105 on order. Its chief executive and Ryanair's both played down the delay earlier this week. The smallest model, the 737-7, was certified in August with the same family of software, and United and Southwest had asked Boeing for jets with older software versions before Friday's ruling.

What the headline gets wrong

"FAA clears 737 MAX" will read to some as the 737-10 being approved. It has not been. The board removed one obstacle; the certification itself is a separate step that still has to happen. Boeing and its airline customers had expected it in early fall, CNBC reported, and early fall is now running out.

What traders are watching

Three things: whether the FAA signs off on the 737-10 in October, whether Southwest starts taking 737-7s this fall with the current software after the bulletin goes out, and whether Boeing pulls its 2028 fix forward. On Nasdaq's data the stock sits about 9% above its 52-week low of $176.77 and about 24% below its high of $254.35, with a market value near $153 billion.

Sources: CNBC, quoting the FAA statement; AeroTime; Nasdaq quote data; earlier Chronicle reporting. This is market information, not investment advice.