Boeing shares tumble as some MAX deliveries halted, airlines fret over impact
Business
Boeing shares tumble as some MAX deliveries halted, airlines fret over impact
(Reuters) - Boeing Co. shares closed down 5.6% on Friday after the planemaker halted deliveries of some 737 MAX jets due to quality-related problems in certain components made by one of its main suppliers.
Boeing is under tough regulatory scrutiny following the deadly crashes of its MAX planes in 2018 and 2019 and the pause in deliveries may delay plans for production ramp-up as it needs to undertake inspections of affected jets, some analysts said.
Any delay in deliveries is likely to upset airlines that have been counting on the company for a timely supply of planes to boost their fleets.
Boeing was poised to raise the production of its best-selling family of jets to 38 in June and 42 by January 2024 from 31 per month currently, Reuters reported earlier this week.
The problem, disclosed by Boeing on Thursday, involves the installation of two fittings that join the aft fuselage made by Spirit AeroSystems to the vertical tail, which were not attached correctly to the structure of the fuselage before it was sent to the planemaker.
The latest quality issue is the second such problem to plague the planemaker this year, after it was briefly forced to halt deliveries of 767 freighters.
Boeing, together with Spirit, will have to undertake inspections of the affected MAX 7, MAX 8 and MAX 8200 airplanes and fuselages.
Akers, however, added that the impact could be "short term in nature" and that Boeing may push its 2023 cash flow goal of $3 billion to $5 billion toward the lower end.
Shares of Spirit closed down 20.7% on Friday.
"We see more negative financial exposure to this news at Spirit than at Boeing," J.P. Morgan analyst Seth Seifman said.
The issue could weigh on the fleet-expansion plans of the airlines.
