Boeing
stock was dropping after the company discovered new problems with its 737 MAX fuselages and said it will have to delay the delivery of 50 planes to work on them.
Boeing took the initiative to tell investors about the issue. It also outlined some actions it is taking to stop similar problems 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
Spirit AeroSystems.
It generates about 60% of total sales from Boeing supplying fuselage sections, including fuselages for the 737 MAX.
“A member of our team identified an issue that does not conform to engineering standards. Once notified, we began immediate actions to identify and implement appropriate repair solutions,” said Spirit Aero in an emailed statement. “We are in close communication with Boeing on this matter.”
Boeing shares fell 2.9% in early trading, and Spirit Aero stock was off 3.8%. The
S&P 500
was down 0.2%, the
Dow Jones Industrial Average
was off 0.4%, and the
Nasdaq Composite
was flat. Coming into Monday trading, Boeing shares were off about 20% so far this year, while Spirit shares had dropped 12%.
The new quality issue is the latest setback for Boeing almost a month after an emergency-door plug blew out on a 737 MAX 9 plane operated by
Alaska Air Group.
The incident led the Federal Aviation Administration to ground all MAX 9 jets. It allowed them 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 win approval for the MAX 7 and MAX 10, versions of the jet with different lengths. Increased FAA oversight is likely to increase how long that takes.
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 is 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.
Write to Al Root at [email protected] and Brian Swint at [email protected]
Read the full article here
