FILE PHOTO: The Boeing logo is pictured at the Latin American Business Aviation Conference & Exhibition fair (LABACE) at Congonhas Airport in Sao Paulo, Brazil August 14, 2018. REUTERS/Paulo Whitaker

(Reuters) - Boeing Co BA.N now thinks it will complete the latest software update for the grounded 737 Max by September after new issue arose last week during a simulator test, a Boeing official said on Thursday.

The timeline means the plane is not likely to resume flying until at least October. The Federal Aviation Administration could approve the plane to resume flights by late September if Boeing is able to meet that deadline, a separate source said. Southwest Airlines Co LUV.N said on Thursday it was extending 737 MAX cancellations until early October.