By Sinéad Carew

NEW YORK (Reuters) -A global equities index fell slightly on Wednesday while Treasury yields edged down and the dollar rose against a basket of currencies on caution the day before U.S. inflation data that could influence Federal Reserve policy.

January’s U.S. personal consumption expenditures price index (PCE), the Fed’s preferred inflation measure, is due on Thursday. Economists polled by Reuters poll expect the index to have risen 0.3% on a monthly basis after a 0.2% increase in December.

Traders have already dialed back expectations for Fed interest rate cuts after a slew of strong data, including hot consumer price index (CPI) and producer price index (PPI) readings. They expect an easing cycle to kick off in June, compared with the start of 2024 when bets were on March.

“We’re on hold until we get the PCE print. The market’s going to chop around,” said Jack Janasiewicz, portfolio manager and lead porfolio strategist at Natixis Investment Managers Solutions. “Between CPI and PPI there’s a narrative that inflation is going to be stickier than expected or even potentially having a modest re-acceleration.”

He noted that U.S. stock indexes remained not far from records reached last week, partly thanks to a better-than-expected fourth-quarter earnings season including a boost from Nvidia on optimism about artificial intelligence.

“The market’s had every chance to sell off but it’s holding up pretty well,” he said. “It’s actually been looking past inflation to an extent because earnings has been better than expected.”

Other data this week that may shape expectations on Fed policy include a second estimate of gross domestic product, jobless claims and manufacturing activity.

MSCI’s gauge of stocks across the globe shed 0.42% while on Wall Street at 02:43 p.m. the Dow Jones Industrial Average fell 142.41 points, or 0.37%, to 38,829.53.

The S&P 500 dropped 15.39 points, or 0.30%, to 5,062.79 and the Nasdaq Composite was down 106.17 points, or 0.66%, at 15,929.12.

European stocks had dipped as lackluster corporate earnings weighed on sentiment with the pan-European STOXX 600 index closing down 0.35%.

The U.S. dollar rose as investors positioned for U.S. and European inflation data, while the Australian and New Zealand dollars tumbled after New Zealand’s central bank cut its forecast peak for interest rates and Australian consumer price inflation held at a two-year low.

The dollar index gained 0.13% at 103.97, with the euro down 0.11% at 1.0832.

Against the Japanese yen, the dollar strengthened 0.12% at 150.68.

U.S. Treasuries yields slid, with the benchmark U.S. 10-year notes yield down 3.7 basis points to 4.278% from 4.315% late on Tuesday. The 30-year bond yield fell 2.6 basis points to 4.4144% from 4.44%. The 2-year note yield, which typically moves in step with rate expectations, fell 6 basis points to 4.6519%, from 4.712% late on Tuesday.

In crypto currencies, bitcoin surged for a fifth day buoyed by flows into new U.S. spot bitcoin exchange traded products that have driven it up nearly 40% in February, which would mark its largest monthly rally since December 2020.

It was last up more than 7% at $60,939, after hitting its highest level since November 2021.

Gold prices ticked up as traders strapped in for economic data and comments from U.S. central bank officials.

Spot gold added 0.08% to $2,031.22 an ounce.

In commodities, U.S. crude oil settled down while Brent barely gained as traders worried the Fed would be slow to cut rates. Growing U.S. crude stockpiles added pressure.

U.S. crude settled down 0.42% at $78.54 per barrel while Brent finished at $83.68, up 0.04% on the day.

(Reporting by Tom Wilson in London and Ankur Banerjee in Singapore; Editing by Muralikumar Anantharaman, Jamie Freed, Tomasz Janowski, Nick Macfie, Aurora Ellis and David Gregorio)

By Howard Schneider

WASHINGTON (Reuters) – U.S. Federal Reserve officials say they are confident housing inflation will finally cool in coming months, a key and long-awaited component of their effort to control overall price increases and secure their turn to interest rate cuts.

The real challenge on that front, however, may be just over the horizon when a pipeline of new apartments starts to run dry while the stock of single-family homes remains short, a recipe for future price pressure in a category accounting for about a third of the Consumer Price Index.

Though their 2% inflation target uses an index that is less sensitive to shelter costs, Fed officials still see housing and rent dynamics as an important, unresolved part of their inflation battle, one that could highlight one of the inherent tensions in today’s tight-credit policy stance.

Fed officials acknowledge the difficulty of finding a rate setting that keeps overall demand in check without choking off the supply of new homes and apartments, but some argue that policymakers already have leaned against the economy too hard.

“You think you can snap your fingers and housing can be created…The reality is that is not the case,” said Jay Lybik, national director of multifamily analytics for real estate data firm CoStar. After a surge of building boosted apartment supply, CoStar’s data signals new unit volumes in sharp decline by early next year, falling to perhaps 50,000 or 60,000 per month versus the estimated 100,000 needed to keep pace with demand.

“We risk a real acceleration in terms of rents that will make things worse come 2025 and 2026,” Lybik said.

‘LONGER-RUN PROBLEMS’

Housing affordability concerns intensified during the pandemic, with median home prices jumping 50% from its onset through the end of 2022 – though they have since eased – and apartment construction tilted towards higher-end units. Members of Congress have called on the Fed to cut rates both to bring down mortgage costs for consumers and encourage construction; states are toying with rent-control measures and programs to boost supply.

The issues are far bigger than the Fed.

“We have longer-run problems with the availability of housing,” Fed Chair Jerome Powell said at a press conference following the central bank’s January meeting. “There hasn’t been enough housing built,” Powell said, but “these are not things that we have any tools to address.”

Housing markets vary widely across the country, shaped by local zoning rules, politics and land prices. Still, financing costs heavily influenced by the Fed are key to the investment decisions being made today that will determine future housing supply.

For the Fed’s immediate purposes, a coming “disinflation” in overall shelter costs seems almost certain as the record pandemic-era jump in rents and home prices fades into the past, but nonetheless essential to gaining the necessary confidence in declining inflation to begin rate cuts. After rapid rate hikes beginning in March 2022, the policy rate has been held at 5.25%-to-5.50% since July.

‘BUILT-IN’ INFLATIONARY PRESSURE

While inflation has fallen from 40-year highs, recent progress has been “bumpy” Fed officials acknowledge, with shelter inflation in particular remaining higher for longer than anticipated.

A surprise jump in CPI last month was largely driven by shelter costs still rising by 6% year-over-year versus 4% typically seen before the pandemic when overall inflation was near or below the Fed’s target.

Rent measures assembled in closer to real time aiming to capture current market prices instead of the slow-moving averages in official data indicate price increases have been slowing. For example, an index from online real estate firm Zillow closely watched by Fed officials was rising at a 3.4% annual rate as of January.

“We know it’s coming,” Arben Skivjani, deputy chief economist for property management and analytics firm RealPage, said of housing inflation’s decline in a recent National Association for Business Economics presentation. After rising nearly 16% annually in early 2022, asking rents have shown virtually no increase since last summer, RealPage data shows.

Supply constraints, though, may risk secularly faster inflation.

“We have not built enough homes, we’ve not built enough shelter for at least a decade…You’re short supply of a good that everybody still wants,” Mark Fleming, chief economist at title and settlement company First American, said at an NABE discussion of housing inflation. “What’s going to happen to the price?…Long run, there’s definitely built-in inflationary pressure.”

MISSING ‘PUZZLE PIECE’

Shelter inflation peaked at an 8.32% annual rate in March 2023, the fastest since the early 1980s. The median home price surged nearly 50% from $322,000 in 2020’s second quarter as the pandemic began to a peak of $479,000 at the end of 2022, Census data shows, the fastest run-up since the early 1960s.

The median price has since edged back to $417,000, a side effect of Fed rate hikes that at one point pushed the average interest rate on a 30-year home mortgage to nearly 8%, the highest in a quarter century.

But some indexes of more recent home sales show prices rising again, leaving Fed officials hunting for data on home sales and construction to show evidence that demand and supply might move toward better balance.

New Cleveland Fed research on the stark supply-demand imbalance that has powered pandemic-era home price appreciation is one example of the focus on it.

Chicago Fed President Austan Goolsbee called housing a missing “puzzle piece” in the Fed’s hope for broadly lower inflation, while Richmond Fed President Thomas Barkin has made analysis of building patterns in his district, comparing communities able to keep pace in new home construction with those that are constrained, a staple of his recent speeches.

EY Chief Economist Gregory Daco said shelter inflation’s near-term path was clear. It is headed down, and could over the next couple of months make a substantial contribution to lower headline inflation, a fact he argues is so clear he feels “increasingly frustrated” by the Fed’s reluctance to act on it.

Next year, he said, is another story.

“Rent inflation has slowed quite tremendously. That has yet to appear fully” in the data the Fed watches most closely, he said. “Fast forward another six to 12 months…and it may actually move the other direction…That’s where the lack of supply comes in.”

(This story has been corrected to change the description of First American in paragraph 17)

(Reporting by Howard Schneider; Editing by Dan Burns and Andrea Ricci)

By Amanda Cooper

LONDON (Reuters) -Bitcoin hit $60,000 on Wednesday for the first time in more than two years, as a surge of capital into new U.S. spot bitcoin exchange-traded products fuelled a rally that has reached 42% this month, on track for its largest monthly gain since December 2020.

Bitcoin was last up 8% at $61,272, its highest since November 2021, when it hit a record just below $70,000. It was also heading for its largest weekly gain in a year, up 18.5% since Feb. 21.

Traders have poured into bitcoin ahead of April’s halving event – a process designed to slow the release of the cryptocurrency. In addition, the prospect of the Federal Reserve delivering a series of rate cuts this year has fed investor appetite for higher-yielding or more volatile assets.

“Bitcoin is being driven by the support of consistent inflows into the new spot ETFs and outlook for April’s halving event and June’s Fed interest rate cuts,” said Ben Laidler, global markets strategist at retail investment platform eToro.

Coinbase Global, the largest U.S. crypto exchange, said on Wednesday it was investigating an issue causing some users to see zero balance across their accounts. Coinbase CEO Brian Armstrong said in a separate post on X that the crypto exchange was dealing with a large surge in traffic.

The value of all the bitcoin in circulation has topped $2 trillion this month for the first time in two years, according to crypto platform CoinGecko, while the price of the token itself has doubled in just four months.

The bigger bitcoin exchange-traded funds (ETFs) have seen a definite pickup in interest this week.

The three most popular, run by Grayscale, Fidelity and BlackRock, have seen trading volumes surge.

On Monday and Tuesday, around 110 million shares in the biggest three changed hands, about 51% of the 215 million shares traded in the market’s most valuable companies – Apple, Microsoft and Nvidia, according to LSEG data.

Three weeks ago, this percentage was closer to 15%.

“Essentially, we’re seeing the ETF effect ahead of schedule … We think it’s reflective of advisors getting out there very quickly to start selling the ETFs to clients,” said Joseph Edwards, head of research at Enigma Securities.

LSEG data showed flows into the 10 largest spot bitcoin ETFs brought in $420 million on Tuesday alone, the most in almost two weeks.

“If $60,000 doesn’t whet the appetite, consider that 70% of bitcoin supply has remained unmoved for a year, and the little that’s left is being hoovered up by the likes of BlackRock and Fidelity, just as rewards for miners are about to be slashed in half,” said the cofounder of the Nexo crypto exchange, Antoni Trenchev.

Crypto investor and software firm MicroStrategy this week disclosed it had recently bought about 3,000 bitcoin for $155 million, while social media platform Reddit said it had bought small amounts of bitcoin and ether.

Meanwhile, the world’s second biggest crypto currency, ether,, which underpins the ethereum blockchain network, rose 3.2% to $3,353, having hit another two-year high earlier in the day. Its price has risen 47% in February.

Some investors are hoping U.S. regulators will approve applications for ETFs based on spot ether.

Enigma Securities’ Edwards said the rise felt reasonably well supported.

“There certainly isn’t a manic feeling to who’s buying and why – ether gaining against the field also speaks to a more measured environment – but there’s at least a little FOMO (fear of missing out) going on right now.”

(Additional reporting by Elizabeth Howcroft in London and Medha Singh in Bangalore; Editing by Alun John, Tomasz Janowski, Alexandra Hudson, Kevin Liffey)

By David Shepardson and Valerie Insinna

WASHINGTON (Reuters) -Boeing must develop a comprehensive plan to address “systemic quality-control issues” within 90 days, the head of the U.S. Federal Aviation Administration said Wednesday, after a mid-air emergency last month sparked renewed safety concerns.

The head of the Federal Aviation Administration (FAA) demanded the plan in a statement critical of the planemaker following an all-day meeting with CEO Dave Calhoun on Tuesday.

“Boeing must commit to real and profound improvements,” FAA Administrator Mike Whitaker said in the statement. “Making foundational change will require a sustained effort from Boeing’s leadership, and we are going to hold them accountable every step of the way, with mutually understood milestones and expectations.” 

Calhoun said in a statement the Boeing leadership team is “totally committed” to addressing FAA concerns.

“We have a clear picture of what needs to be done,” Calhoun said in a statement. “Boeing will develop the comprehensive action plan with measurable criteria that demonstrates the profound change that Administrator Whitaker and the FAA demand.”

Boeing has scrambled to explain and strengthen safety procedures after a door panel detached during a Jan. 5 flight on a brand new Alaska Airlines 737 MAX 9, forcing pilots to make an emergency landing while passengers were exposed to a gaping hole 16,000 feet above the ground.

Boeing’s production rate has been capped by regulators and closely scrutinized by lawmakers and customers following the Jan. 5 incident and the new statement raises fresh questions about how long the production rate halt will last.

Whitaker said Boeing’s plan must incorporate forthcoming results of the FAA production-line audit and findings from an expert review panel report released earlier this week.

That report, which had been commissioned in early 2023, was highly critical of the company’s safety management processes, saying Boeing suffered from “inadequate and confusing implementation of the components of a positive safety culture.”

Boeing last week abruptly removed Ed Clark, the head of its troubled 737 MAX program, as part of a management shakeup.

Shares were up 2.3% on Wednesday.

‘SYSTEMIC SHIFT’

The FAA said Wednesday Boeing must take steps to improve its Safety Management System (SMS) program, which it committed to in 2019 and combine it with a Quality Management System to “create a measurable, systemic shift in manufacturing quality control.”

Whitaker visited Boeing’s Renton, Washington, factory, where the 737 MAX line is produced, on February 12. Whitaker expressed concerns about some things he saw on the tour, two people briefed on the matter told Reuters.

The FAA meetings with Calhoun lasted more than seven hours, sources said, and much of it focused on a series of quality issues at the planemaker.

“Boeing must take a fresh look at every aspect of their quality-control process and ensure that safety is the company’s guiding principle,” Whitaker said. 

The Alaska Airlines mishap is Boeing’s second major crisis in recent years, after crashes in 2018 and 2019 of MAX planes killed 346 people. That prompted a grounding of the 737 MAX for 20 months that damaged Boeing’s reputation.

The FAA panel report referenced the recent issues, saying it amplified concerns that “safety-related messages or behaviors are not being implemented across the entire Boeing population.”

Airline industry executives have expressed frustration with Boeing’s quality control. France’s Airbus, the only other major manufacturer of commercial jets, in January reported record annual jet orders and confirmed an 11% rise in 2023 deliveries, maintaining the top manufacturing spot against Boeing for a fifth year.

The FAA grounded the MAX 9 for several weeks in January and has capped Boeing’s production of the MAX while it audits the manufacturing process after a string of quality issues.

The door panel that flew off the MAX 9 appeared to be missing four key bolts, according to a preliminary report this month from the U.S. National Safety Transportation Board. The panel is a plug in place on some 737 MAX 9s instead of an additional emergency exit.

According to the report, the door plug in question was removed to repair rivet damage, but the NTSB has not found evidence the bolts were re-installed.

The disclosure angered Boeing’s airline customers. Some, including Alaska Airlines, announced they would conduct enhanced quality oversight of planes before they leave the Boeing factory.

(Reporting by David Shepardson and Valerie Insinna;Editing by Nick Zieminski and Aurora Ellis)

By Dan Levine and Kristina Cooke

(Reuters) -The chairwoman of the Federal Communications Commission on Wednesday will propose a potential new rule that would subject automakers that sell internet-connected cars to a telecommunications law intended to protect domestic violence survivors.

Cases of technology-enabled stalking involving cars are emerging as automakers add ever more sophisticated features, such as location tracking and remote control of functions like locking doors or honking the horn.

FCC Chairwoman Jessica Rosenworcel last month wrote to nine large automakers and three telecom providers seeking more information about their policies involving internet-connected car technology and domestic abuse. The federal Safe Connections Act gives the FCC authority to help domestic abuse survivors securely access communications, the letter said.

The FCC has required telecom providers under the law to separate phone lines linked to family plans where the abuser is on the account.

In an interview with Reuters this week, Rosenworcel said issues involving connected cars and domestic abuse “seemed extraordinarily similar” to the work the FCC had already done implementing the Safe Connections Act. Rosenworcel will circulate a “notice of proposed rulemaking” to other FCC commissioners, which will say some types of connectivity arrangements in cars are also covered by the law.

If the full FCC adopts it, a formal public comment period would commence. That could ultimately lead to new rules for the sector.

“It’s really important to remember that we want to make sure survivors of domestic violence are safe, and that their connections are secure,” Rosenworcel said.

The notice will seek comment on what proactive steps car service providers can take to protect survivors from being stalked, harassed or intimidated through their cars, Rosenworcel said. “We are open to creative ideas,” she said.

The Alliance for Automotive Innovation, a car industry group, referred on Wednesday to a previous letter it wrote to Rosenworcel, which said in-vehicle connected services “fall outside the purview” of the Safe Connections Act. “Because the connectivity functionality is associated with the vehicle, rather than a particular person, it cannot be separated among users of the vehicle,” the letter said.

Reuters in December reported on a woman who unsuccessfully sued Tesla, alleging the company negligently failed to help her after she repeatedly complained that her husband was stalking and harassing her with the automaker’s technology. She would return to the Model X to find the doors open, the suspension settings changed, and the vehicle’s ability to charge turned off. Tesla argued she had no proof that her husband used the car’s technology to stalk her.

When the woman and her husband bought the car, he configured the settings to make himself the administrator on the account and listed her as an additional driver, her lawsuit said. That meant she could not remove his access without his password. When she complained, Tesla told the woman it could not remove him because his name remained on the vehicle’s title as a co-owner, along with hers, according to records she filed in her lawsuit.

Rosenworcel asked auto companies last month if they had processes in place to act on requests from domestic violence survivors to remove access to connected apps from individuals on the title. “Some automakers replied in more detail than others,” she said.

Tesla did not specifically address the issue of domestic abuse in its response, saying customers can grant temporary or permanent access to other drivers and restrict visibility to those people if they wish. The automaker also did not address the question of removing access from people who are on the title.

“Customer data privacy is important to Tesla and embedded in each product, service, and feature by design,” the company wrote.

Meanwhile, Toyota said if a domestic abuse survivor on the title requests that connected services be disabled for another person, the company may ask for verification from law enforcement that the customer was a victim.

“Through these steps, Toyota works to respond promptly to requests from domestic abuse survivors while also focusing on appropriate authentication in order to screen out fraudulent or abusive requests that could further harm the abuse survivor,” the company said in its response.

The chairwoman expects the FCC will likely take up the issue in the next month.

(Reporting by Dan Levine and Kristina Cooke in San FranciscoEditing by Peter Henderson and Matthew Lewis)

By Caroline Humer

NEW YORK (Reuters) -U.S. Food and Drug Administration Commissioner Dr. Robert Califf said on Wednesday that he is very concerned about the prevalence of compounded and fake versions of highly in demand new weight loss drugs online.

Consumers seeking these medicines are attracted to compounded versions that are sold without proper controls to ensure they get the right active drug, Califf said in a Reuters Newsmaker interview.

“In the context of the total picture of illicit drugs being sold on the internet, it’s almost certainly bigger than, much bigger than what we see,” he said of such reports to the agency.

Demand has been far outpacing supply with some analysts forecasting the market for weight-loss drugs, currently led by Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound and Mounjaro, could reach $100 billion a year by the end of the decade.

Earlier this month, the FDA sent warning letters to two online vendors for selling unapproved and misbranded versions of semaglutide and tirzepatide, the active ingredients Wegovy and Zepbound, respectively. Counterfeit versions of diabetes drug Ozempic, which has the same active ingredient as Wegovy and has been used off label for weight loss, have sent people to the hospital with dangerously low blood sugar.

Califf said he is also concerned about the “enormous disparity” between people who can access the potent new drugs based on wealth or connections to the medical community, and those who do not have those advantages but might have a greater need for the treatments.

Wegovy and Zepbound both have retail prices of over $1,000 a month. Only about a fifth of employers covered prescription weight loss therapies as of last March, according to the International Foundation of Employee Benefit Plans, meaning many patients would have to pay full price.

Asked about drug research areas not getting enough investment, Califf pointed to a lack of development of medicines to treat mental health issues.

He also said more research was needed for medicines to treat chronic lung diseases, which he said was a fast growing cause of shortened life expectancy.

OVERSIGHT OVERSEAS

Concerns about unregulated and counterfeit medicines are not limited to weight loss drugs.

“I’m taking four generic drugs for my hypertension and elevated cholesterol… and if I got a drug that was half as potent as I thought it was, I could have a heart attack, never knowing that I didn’t get the treatment that I thought I was getting,” said Califf, 72, now in his second stint as FDA chief.

“The cough syrup catastrophe, which didn’t affect the U.S but killed a number of children in Asia (and Africa), really called attention to the problem,” he said.

Indian-made cough syrups have been linked to the deaths of at least 141 children in Gambia, Uzbekistan and Cameroon since 2022, a blow to the image of the world’s third largest drug-manufacturing country after the United States and China.

A court in Uzbekistan sentenced 23 people to prison terms on Monday over the deaths of 68 children linked to contaminated cough syrups produced by India’s Marion Biotech.

Califf said he had spent much time in India during his academic days and has a number of connections with the government there.

“There’s a lot of goodwill right now in terms of fixing the problems that we’ve seen,” he said, adding that these problems are not just in India.

The FDA has increased inspections of manufacturing facilities outside of the United States, he said. A big proportion of starting materials and chemicals used to make drugs come from China, while much of the manufacturing of the finished product takes place in India, Califf said.

“There is an industrial policy and national security question; do we want to bring more of this into a secure supply chain, either onshore or near shore? I think the answer to that is yes,” he said. “The question is how much and how do you do it?”

(Reporting by Caroline Humer; Writing by Ahmed Aboulenein; Editing by Bill Berkrot)

By Stephen Nellis

(Reuters) -Apple plans to disclose more about its plans to put generative artificial intelligence to use later this year, Chief Executive Officer Tim Cook said during the company’s annual shareholder meeting on Wednesday.

Cook said that the iPhone maker sees “incredible breakthrough potential for generative AI, which is why we’re currently investing significantly in this area. We believe that will unlock transformative opportunities for users when it comes to productivity, problem solving and more.”

Apple has been slower in rolling out generative AI, which can generate human-like responses to written prompts, than rivals such as Microsoft and Alphabet’s Google, which are weaving them into products.

On Wednesday, Cook argued that AI is already at work behind the scenes in Apple’s products but said there would be more news on explicit AI features later this year. Bloomberg previously reported Apple plans to use AI to improve the ability to search through data stored on Apple devices.

“Every Mac that is powered by Apple silicon is an extraordinarily capable AI machine. In fact, there’s no better computer for AI on the market today,” Cook said.

Apple shareholders on Wednesday rejected a measure asking the company to disclose more information about how it uses artificial intelligence in its business and its ethical guidelines for the technology.

The proposal, which was defeated at the company’s annual shareholder meeting, was put forth by the pension trust of the AFL-CIO, the largest American labor union federation, which has also proposed AI measures at other technology companies.

A similar proposal will be heard at Walt Disney’s annual meeting in April.

At Apple, the AFL-CIO asked for a report on the company’s use of AI “in its business operations and disclose any ethical guidelines that the company has adopted regarding the company’s use of AI technology.”

In its supporting statement in Apple’s proxy materials, the AFL-CIO wrote that “AI systems should not be trained on copyrighted works, or the voices, likenesses and performances of professional performers, without transparency, consent and compensation to creators and rights holders.”

Apple opposed the measure, saying that disclosures could tip its hand on strategy as it competes against rivals in the fast-moving AI field.

(Reporting by Stephen Nellis in San Francisco; Editing by Jonathan Oatis and Lisa Shumaker)

By David Shepardson and Valerie Insinna

WASHINGTON (Reuters) -Boeing said Wednesday it had agreed to a U.S government demand to develop a comprehensive action plan to address “systemic quality-control issues” within 90 days after a mid-air emergency last month sparked renewed safety concerns.

The head of the Federal Aviation Administration (FAA) demanded the plan on Wednesday in a statement critical of the planemaker following an all-day meeting with CEO Dave Calhoun on Tuesday.

“Boeing must commit to real and profound improvements,” FAA Administrator Mike Whitaker said in the statement. “Making foundational change will require a sustained effort from Boeing’s leadership, and we are going to hold them accountable every step of the way, with mutually understood milestones and expectations.” 

Calhoun said in a statement the Boeing leadership team is “totally committed” to addressing FAA concerns.

“We have a clear picture of what needs to be done,” Calhoun said in a statement. “Boeing will develop the comprehensive action plan with measurable criteria that demonstrates the profound change that Administrator Whitaker and the FAA demand.”

Boeing has scrambled to explain and strengthen safety procedures after a door panel detached during a Jan. 5 flight on a brand new Alaska Airlines 737 MAX 9, forcing pilots to make an emergency landing while passengers were exposed to a gaping hole 16,000 feet above the ground.

Boeing’s production rate has been capped by regulators and closely scrutinized by lawmakers and customers following the Jan. 5 incident and the new statement raises fresh questions about how long the production rate halt will last.

Whitaker said Boeing’s plan must incorporate forthcoming results of the FAA production-line audit and findings from an expert review panel report released earlier this week.

That report, which had been commissioned in early 2023, was highly critical of the company’s safety management processes, saying Boeing suffered from “inadequate and confusing implementation of the components of a positive safety culture.”

Boeing last week abruptly removed Ed Clark, the head of its troubled 737 MAX program, as part of a management shakeup.

‘SYSTEMIC SHIFT’

The FAA said Wednesday Boeing must take steps to improve its Safety Management System (SMS) program, which it committed to in 2019 and combine it with a Quality Management System to “create a measurable, systemic shift in manufacturing quality control.”

Whitaker visited Boeing’s Renton, Washington, factory, where the 737 MAX line is produced, on February 12. Whitaker expressed concerns about some things he saw on the tour, two people briefed on the matter told Reuters.

The FAA meetings with Calhoun lasted more than seven hours, sources said, and much of it focused on a series of quality issues at the planemaker.

“Boeing must take a fresh look at every aspect of their quality-control process and ensure that safety is the company’s guiding principle,” Whitaker said. 

The Alaska Airlines mishap is Boeing’s second major crisis in recent years, after crashes in 2018 and 2019 of MAX planes killed 346 people. That prompted a grounding of the 737 MAX for 20 months that damaged Boeing’s reputation.

The FAA panel report referenced the recent issues, saying it amplified concerns that “safety-related messages or behaviors are not being implemented across the entire Boeing population.”

Airline industry executives have expressed frustration with Boeing’s quality control. France’s Airbus, the only other major manufacturer of commercial jets, in January reported record annual jet orders and confirmed an 11% rise in 2023 deliveries, maintaining the top manufacturing spot against Boeing for a fifth year.

The FAA grounded the MAX 9 for several weeks in January and has capped Boeing’s production of the MAX while it audits the manufacturing process after a string of quality issues.

The door panel that flew off the MAX 9 appeared to be missing four key bolts, according to a preliminary report this month from the U.S. National Safety Transportation Board. The panel is a plug in place on some 737 MAX 9s instead of an additional emergency exit.

According to the report, the door plug in question was removed to repair rivet damage, but the NTSB has not found evidence the bolts were re-installed.

The disclosure angered Boeing’s airline customers. Some, including Alaska Airlines, announced they would conduct enhanced quality oversight of planes before they leave the Boeing factory.

Boeing shares were up 1.6%.

(Reporting by David Shepardson and Valerie Insinna;Editing by Nick Zieminski and Aurora Ellis)

By Rajesh Kumar Singh

CHICAGO (Reuters) – Low-cost U.S. carrier Allegiant expects fewer aircraft deliveries from Boeing this year, its president told Reuters, as the planemaker grapples with the fallout of a frightening incident last month when a cabin panel tore off of a 737 MAX 9 jet mid-flight.

The Las Vegas-based airline was scheduled to receive 24 MAX planes in 2024, but Allegiant President Greg Anderson said it is working on the assumption that it will receive closer to 12 aircraft this year.

“We are in regular dialogue with Boeing on this,” he said in an interview on Tuesday. “We can manage through it as long as we have an orderly delivery cadence from Boeing.”

The planemaker has scrambled to explain and strengthen safety procedures since the Jan. 5 incident. Its production rate has been capped by regulators and closely scrutinized by lawmakers and customers. That has had a ripple effect on the industry, as several air carriers have said they are considering adjusting schedules or keeping older planes in service longer.

In 2022, Allegiant placed an order for 50 of Boeing’s best-selling single-aisle 737 MAX planes, rejecting offers from traditional supplier Airbus. It was scheduled to take delivery of 10 of the jets in 2023, 24 in 2024, and 16 in 2025.

Allegiant has traditionally relied on less expensive second-hand planes. With the introduction of MAX planes, it expected to launch new routes and reduce operating costs.

The carrier has yet to receive its first MAX aircraft, said Anderson, adding the delivery is now expected in the coming months.

The head of the U.S. Federal Aviation Administration (FAA) on Wednesday asked the planemaker to develop a comprehensive action plan to address “systemic quality-control issues” within 90 days, raising fresh questions as to how long the cap on production would last.

Anderson said the safety culture at the U.S. planemaker has “rightfully been brought into focus,” adding a stronger Boeing will be good for the industry.

Allegiant is using its own experts as well as engineers from Lufthansa’s aircraft maintenance business, Lufthansa Technik, to ensure that the planes leaving Boeing’s factory are of “the quality and standard they need to be,” he said.

“We’ve heightened our approach in that area,” Anderson said.

The delays have prompted the company to reactivate a few of its used Airbus A320s that it was planning to retire to boost capacity during summer peak flying season, Anderson said.

Allegiant plans to boost capacity by 2% to 6% in 2024 from a year ago, and the reactivation of older jets means the delays “shouldn’t impact our capacity plans,” he said.

(Reporting by Rajesh Kumar Singh in Chicago; Editing by Nia Williams and Matthew Lewis)

LONDON (Reuters) – American rapper Ja Rule said he was “devastated” that he had been denied entry to Britain days before he was due to begin the opening leg of his international tour due to his criminal record.

All the British performances of “The Sunrise Tour”, including in London, Nottingham and Liverpool, were showing as cancelled on the Ticketmaster website. It was due to begin on March 1.

“I’m so devastated, I can’t believe the UK won’t let me in. I’ve spent a half million dollars in production of my own money to put this tour together only to be denied entry days before my shows,” Ja Rule said on social media site X late on Tuesday.

“The UK is one of the few European countries that restricts entry to people with criminal records.”

The Grammy-nominated rapper, whose real name is Jeffrey Atkins, served about two years in prison on gun and tax evasion charges.

He pleaded guilty in 2011 to failing to file tax returns over a five year period and pleaded guilty to a weapons possession charge in 2010.

In a follow up post on Wednesday, Ja Rule said the promoter had assured his team that the criminal record would not be an issue.

British government guidance says permission to enter will be refused where someone has been convicted of a criminal offence, either in Britain or overseas, for which they received a custodial sentence of 12 months or more.

Ja Rule secured a Grammy nomination for his 2001 album “Pain Is Love” and has appeared in several films, notably 2001’s “The Fast and the Furious”.

In a separate incident in 2022, U.S rapper Lil Wayne was denied entry into the UK where he had been scheduled to perform at a British music festival. Organisers said the refused entry was a last minute decision by the Home Office.

Lil Wayne had previously been sentenced to one year in jail in 2010 relating to a gun possession charge.

(Reporting by Farouq Suleiman; Editing by Alexandra Hudson)