A bust-up between Boeing and the Federal Aviation Administration, the US regulator, has backed the aviation giant into a corner over the future of its 737 Max aircraft.

The aerospace group said last week that it would halt production of the plane in January after the FAA refused to authorise its return to service until 2020. The Max was grounded around the world in March following two fatal crashes, blamed on new anti-stall software, that claimed 346 lives.

Sandy Morris, an aerospace analyst at Jefferies, said the FAA’s tougher stance with Boeing and its refusal to rush the plane back into service suggested the Max would not be approved until summer at the earliest.

“My guess is that it’s at least another six months [until certification] and may even be longer. It could be a year. If there were another incident, Boeing would be toast. So it feels like it’s going to get done properly.”

Analysts note that even after the plane has been given the regulatory green light, it could take a year until the grounded fleet are all back in the air. Boeing’s manufacturing shutdown looks sure to inflate the $9bn (£7bn) it has already cost the planemaker, including $5bn set aside to compensate airline customers for the grounding. Ronald Epstein, analyst at Bank of America Merrill Lynch, estimates the 737 Max grounding will eventually cost Boeing about $14bn.

The FAA has been attacked for its handling of the crisis. It was the last big global regulator to ground the Max following the second crash and has been accused of failing to exercise proper oversight due to its close relationship with the aerospace giant.

Last week, the EU’s aviation safety chief, Patrick Ky, said Boeing should be subjected to scrutiny from international regulators, suggesting Europe had a more “structured and rigid” approach than the FAA.

Dennis Muilenburg, Boeing’s chief executive, testifies at a congressional hearing on the grounded Max aircraft in October. Photograph: Sarah Silbiger/Reuters

However, according to reports, tensions boiled over at showdown talks this month between Steve Dickson, head of the FAA, and Dennis Muilenburg, Boeing’s chief executive. Dickson called the meeting to address Boeing’s unrealistic timetable for returning the Max to service. He felt the planemaker was putting undue pressure on the agency to recertify the plane by the end of the year.

The stakes couldn’t be higher for Boeing. The 737 Max was previously its bestselling plane, with 580 deliveries during 2018. Boeing’s overall deliveries had fallen by half during the first nine months of the year. It has nearly 4,500 on order, worth over $500bn at list prices (each costs about $121m).

Since the grounding, the production rate had slowed by almost a fifth to 42 a month, with around 400 in total coming off the production line. The decision to suspend manufacturing has cast a huge cloud over the plane and raised doubts about when – or if – it will return to service.

Airlines have withdrawn it from their schedules for several months. American Airlines this month pulled it until 7 April and Southwest, the biggest user of the plane, said the flying ban had cut its operating income by $830m this year.

Other customers have launched legal action against Boeing. Timaero, an Irish company that sells and leases aircraft, has filed a lawsuit in the US seeking to cancel an order for 22 Max jets and damages of at least $185m. Documents filed on Tuesday in a US district court alleged that Boeing had acted fraudulently in selling the troubled aircraft. Turkish Airlines, which has 24 of the planes, is also believed to be preparing legal action.

Boeing is expected to defend the suits, and industry experts believe customers will stick with the plane, and that the traumatic episode will fade from the memory once the Max is allowed to return to the skies.

Ashwin Tiruvasu, senior industrials analyst at CreditSights, said in a note to clients: “While we still expect Boeing’s 737 customers to stick around, further disruptions to the delivery schedule will only generate further frustration as well as more charges in terms of compensation and a likely write-off as a result.”

It may be some time, though, until investors and customers are prepared to once again embrace the mantra: “If it’s not Boeing, I’m not going.”