Boeing Tumbles On Fresh Max Woes: Faulty Part Found On “Significant Number Of Undelivered 737 Max Planes”

Boeing Co. had just turned the corner with a surge in quarterly deliveries, surpassing rival Airbus SE for the first time in nearly five years. However, this week it was revealed that parts had been installed incorrectly on the plane maker’s top-selling 737 Max jets, resulting in a production issue and causing some deliveries to be placed on hold.

Boeing Co. is pausing deliveries of some 737 Max jets after learning of a manufacturing issue that doesn’t affect the safety of planes in the air, the company said Thursday.

“This airplane is designed by clowns, who are in turn supervised by monkeys”

— zerohedge (@zerohedge) April 13, 2023

Boeing expects a significant impact on near-term deliveries of the 737 MAX 7, 737 MAX 8, and MAX 8-200 jets, as well as the P-8 military reconnaissance planes. 

$BA will pause the delivery of some 737 Max models after the company discovered issues with a supplier’s component. @Lebeaucarnews reports: pic.twitter.com/5vB1qCMbuZ

— Squawk Box (@SquawkCNBC) April 14, 2023

According to Barron’s, a statement was sent via email by a spokesperson from the company, who explained the issue:  

“A supplier has notified us that a nonstandard manufacturing process was used during the installation of two fittings in the aft fuselage section of certain [737 MAX] airplanes, creating the potential for a nonconformance to required specifications.

“This is not an immediate safety of flight issue and the in-service fleet can continue operating safely. However, the issue will likely affect a significant number of undelivered 737 MAX airplanes, both in production and in storage.”

Boeing further stated that the Federal Aviation Administration had been notified about production issues and that efforts are underway to examine and replace faulty parts. 

Bloomberg identified Spirit AeroSystems Holdings Inc. as the supplier of the nonconforming parts. 

Shares of Boeing slid more than 5% in premarket trading in New York, and shares of Spirit AeroSystems tumbled 11.5%. 

Max issues have been a concern to investors, given that the aircraft was grounded globally from March 2019 to November 2020 after two fatal crashes occurred within five months of each other, killing 346 people. 

It remains to be seen whether the production issue will have a meaningful impact on Boeing’s plan to increase 737 production. The problem doesn’t immediately affect the safety of planes in service with airlines.

For more color on the situation, Bloomberg Intelligence said:

“The stoppage is concerning given the airplane is vital to Boeing’s turnaround. Its importance likely means a remedy will be urgently pursued, though reworking it could be costly and an extended pause would significantly hurt commercial profit, cash generation and the balance sheet.

“We have processes in place to address these of types of production issues upon identification, which we are following,” Spirit said in a separate statement. “Spirit is working to develop an inspection and repair for the affected fuselages,” George Ferguson, BI aerospace industry analyst, wrote. 

Jefferies analyst Sheila Kahyaoglu told clients:

“There is an investigative process along with determining the root cause and remedy, which could have an unknown timeline to complete.” 

And Truist analyst Michael Ciarmoli wrote:

“The Boeing news comes as a negative surprise, analyst Michael Ciarmoli writes, given the expectation of Max production-rate increases in the near term.” 

Ciarmoli added:

“Spirit AeroSystems will be the most impacted, and analyst expects the entire sector to be under pressure.” 

Another production quality and standards issue will further erode Boeing’s credibility and trustworthiness. 

Several years ago, NYT obtained emails from Boeing employees who said, “This airplane is designed by clowns, who are in turn supervised by monkeys.” 

Oh yeah, and there’s this…

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