WASHINGTON -- The software fix for Boeing Co.'s 737 Max models may end up costing the Chicago-based aircraft manufacturer billions of dollars as it redesigns a computerized flight-control system on hundreds of jets sitting idle around the world.
The fixes alone for the revamped version of Boeing's single-aisle workhorse 737 could cost the company around $500 million if everything is resolved in six to eight weeks, according to Canaccord Genuity analyst Ken Herbert.
Delivery delays and reimbursements to airlines for flight disruptions would add another $2 billion in lost cash flow each month the planes are kept on the ground by regulators, Herbert said. Boeing could make much of that money back if deliveries resume promptly.
Yet that's the best-case scenario, Herbert said. If it turns out the investigation into last Sunday's Ethiopian Airlines crash identifies new issues or complications, he said, the costs of fixing the software "could be substantially higher."
Boeing earlier this week outlined multiple changes it expects to make within weeks as a result of an October crash near Indonesia that raised concerns about an automated safety system on the plane. The urgency of those upgrades heightened significantly on Wednesday when the U.S. joined other nations and grounded the plane after it appeared that similar issues may have played a role in the crash in Ethiopia.
If the change is sufficient, this setback "should have very little long-term impact on the success of the Max," Herbert said.
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Boeing, in consultation with the U.S. Federal Aviation Administration, will add redundancy and other limits to the Max's Maneuvering Characteristics Augmentation System, MCAS, so it's less likely to command the repeated nose-dives preceding the Lion Air crash Oct. 29 that killed 189 people near Jakarta, the company said in a statement Monday.
The FAA promised it would act "no later" than April. Boeing predicted it would be completed "in the coming weeks."
While the FAA and other regulators around the world haven't said precisely what it will take to get the plane back into the air, one critical thing will be to restore confidence in MCAS.
In the Lion Air crash, a faulty sensor at the nose of the plane sent an erroneous warning that the plane's nose was pointed too high and could plummet out of control because of a loss of lift on the wings, known as an aerodynamic stall. No such danger actually existed.