Boeing Stock Is Falling. The 737 MAX Has a New Problem.
By Brian Swint
and Al Root
Updated Feb 05, 2024, 7:31 am EST / Original Feb 05, 2024, 5:25 am EST
The stock was falling after the company discovered
new problems with its 737 MAX fuselages and will have to delay the delivery of 50 planes to work on them.
Boeing took the initiative to tell investors about them. It also outlined some actions it’s taking to stop them from happening in the future.
The new issue is improperly drilled holes. “This past Thursday, a supplier notified us of a non-conformance in some 737 fuselages,” said Boeing Commercial Airplanes CEO Stan Deal in a memo posted on the company’s website. “While this potential condition is not an immediate flight-safety issue and all 737s can continue operating safely, we currently believe we will have to perform rework on about 50 undelivered airplanes.”
The supplier is likely
Spirit AeroSystems. It generates about 60% of total sales from Boeing supplying fuselage sections, including fuselage for the 737 MAX.
Spirit and Boeing didn’t immediately return a request for comment.
Boeing shares fell 2.l1% in premarket trading, and Spirit stock was off 3.1%, while
S&P 500 futures were down 0.2%,
Dow Jones Industrial Average futures were off 0.1%, and
Nasdaq Composite futures were little changed. Coming into Monday trading Boeing shares were off about 20% year to date, while Spirit shares dropped 12%.
The new quality issue is the latest setback for Boeing almost a month after a door plug blew off a 737 MAX 9 plane operated by
Alaska Air Group. The incident led the Federal Aviation Administration to ground all MAX 9 jets. Those jets were allowed to return to service about three weeks later after all the planes had been inspected and any issues corrected.
The MAX 9 is one of the two versions of the MAX jet approved for commercial service. The MAX 8 is the main MAX version with more than 1,200 planes in operation. Boeing has shipped about 200 MAX 9 jets to customers.
Boeing is also trying to get the MAX 7 and 10 approved. Increasing FAA oversight is likely to increase how long that takes. The different versions are different lengths.
Tim Clark, the head of Emirates Airline, said that Boeing’s quality standards have slowly declined for years. In an interview with the Financial Times, Clark said that it was imperative for Boeing to establish a “safety culture that is second to none.” This is the “last chance saloon,” he said.
Boeing’s Deal, in his memo, mentioned actions taken to improve quality including less unfinished work moving down the assembly line and implementing quality improvement ideas from workers submitted during a recent meeting on quality.
Despite Boeing’s problems, it’s one of just two major manufacturers of commercial airplanes leaving airlines such as Emirates in a tough spot. Rival
Airbus was down 0.2% in Paris trading on Monday.
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