Shares of Boeing Co (NYSE: BA) plunge over 6% in pre trading session on Friday after due to production problems, the business issued a late-Thursday warning of decreased 737 Max airplane production and deliveries in the near future. Since experts had predicted that Boeing will shortly raise 737 Max output, BA shares fell as a result of the announcement.
The aviation behemoth revealed late Thursday that a component problem at supplier Spirit AeroSystems (SPR) may cause a delay in the delivery of its 737 Max aircraft. Boeing emphasized that there is no safety concern and that the current fleet of operational aircraft may continue to fly.
The 737 Max family of aircraft is impacted by the manufacturing issue. This comprises the P-8 Poseidon maritime surveillance aircraft, as well as the Max 7, Max 8, and Max 8200 aircraft. The problem, according to Boeing, is unrelated to safety, and current in-service aircraft may keep flying.
According to a statement from Boeing, “This is not an immediate safety of flight issue and the in-service fleet can continue to operate safely.”
The installation of two fittings, built by SPR, connecting the aft fuselage to the vertical tail is the issue.
Boeing added in the statement, “We have informed the FAA of the issue and are working to perform inspections and replace the non-conforming fittings where appropriate. We apologize for the effects this problem will have on the impacted clients and are in touch with them about the delivery timetable.
After two deadly crashes, the 737 Max passenger plane was grounded internationally in 2019. Since then, the aircraft has been used again as Boeing attempts to increase delivery rates.
Myles Walton, an analyst with Wolfe Research, stated on Friday that he was “cautiously optimistic” that Boeing can still meet the 737 Max jet forecast. According to Walton, the manufacturing delays occur “just as positive momentum was beginning to build.”
The Wolfe Research analyst does not anticipate a production halt as a result of this problem, but rather anticipates a delay in final assembly while Boeing completes the inspection necessary before going into final assembly.
Walton claimed that despite this problem, Boeing should still be able to target 400–450 deliveries and that the Boeing stock could find support near 200. The company keeps a “Outperform” rating and has set a price target of 240 for Boeing stock.
On Monday, Scott Deuschle, an analyst at Credit Suisse, agreed with Walton. According to Deuschle, Boeing has not completely stopped deliveries and is still delivering airplanes using components from different sources. With a 220 price target, Credit Suisse retained its “Neutral” rating on BA.
