Boeing has encountered another setback as it recently discovered new issues with the fuselages of its 737 MAX planes. As a result, the company will need to delay the delivery of 50 planes in order to work on resolving these problems.
In a proactive move, Boeing promptly informed investors about the situation, while also providing an overview of the measures it plans to take to prevent such issues from recurring in the future.
The problem at hand pertains to improperly drilled holes. According to a memo by Boeing Commercial Airplanes CEO Stan Deal, a supplier - potentially Spirit AeroSystems - notified the company about non-conformance in certain 737 fuselages. Deal emphasized that although this issue does not pose an immediate safety risk for flight, approximately 50 undelivered airplanes will require rework.
Currently, Spirit AeroSystems, which supplies fuselage sections for Boeing, including those for the 737 MAX, generates nearly 60% of its total sales from its collaboration with the aircraft manufacturer.
As of now, there have been no comments provided by either Spirit or Boeing regarding this matter.
Following this news, premarket trading saw a decline of 2.1% in Boeing shares, while Spirit stock dropped by 3.1%. S&P 500 futures were down 0.2%, Dow Jones Industrial Average futures saw a decrease of 0.1%, and Nasdaq Composite futures remained relatively unchanged. Year to date, Boeing shares were already experiencing a decline of about 20%, and Spirit shares had dropped by 12% prior to this setback.
Boeing Faces New Quality Issue with MAX Jets
Boeing, one of the leading manufacturers of commercial airplanes, is facing yet another setback with its MAX jets. This issue comes almost a month after a door plug blew off a 737 MAX 9 plane operated by Alaska Air Group, causing the Federal Aviation Administration (FAA) to ground all MAX 9 jets. After thorough inspections and necessary corrections, these jets were allowed to resume service three weeks later.
The MAX 9 is one of two versions of the MAX jet that are approved for commercial service. The MAX 8 is the primary MAX version, currently with over 1,200 planes in operation. Boeing has already delivered approximately 200 MAX 9 jets to its customers.
Boeing is also striving to obtain approval for its MAX 7 and 10 versions, but the increasing FAA oversight will likely extend the timeline for that process. Notably, these different versions vary in length.
In an interview with the Financial Times, Tim Clark, the head of Emirates Airline, expressed concerns over Boeing's declining quality standards over the years. According to Clark, it is crucial for Boeing to establish an unparalleled "safety culture." He referred to this situation as Boeing's "last chance saloon."
To address quality concerns, Boeing has taken several actions outlined in a memo by Boeing's Deal. These actions include minimizing unfinished work on the assembly line and integrating quality improvement suggestions from workers, which were proposed during a recent meeting on quality.
Despite Boeing facing these challenges, it remains one of the two major manufacturers of commercial airplanes, leaving airlines like Emirates in a difficult position. In contrast, rival company Airbus experienced a slight decrease of 0.2% in Paris trading on Monday.
