Boeing shares tumble as parts issue halts deliveries of some 737 MAXs

Washington, Apr. 14 (BNA) Shares of Boeing (BA.N) fell 6% in pre-market trading Friday after the US aircraft maker halted deliveries of some 737 MAX jets due to a new supplier quality issue by Spirit AeroSystems (SPR). .N).


Reuters reported that Spirit, which makes the fuselage, thrust reversers, engine pylons and wing components for the 737 MAX, fell 14 percent.


Boeing revealed Thursday that the latest quality issue is related to a fuselage assembly supplied by Spirit and is believed to date back to 2019.


“I don’t know if there is a long-term concern about Boeing’s 737s…” said Art Hogan, chief market strategist at Riley Wealth.


“We’ve known for some time that there would be a financial cost to Boeing to get their house in order. What we didn’t know was how many 737s they would be able to deliver and it seemed like it was even more than we estimated.”


Boeing warned that the problem will likely affect a “significant” number of 737 Max jets that are not delivered either in production or in storage, and could lead to a reduction in 737 Max shipments in the near term.


Analysts worry the latest bump will affect Boeing’s plans to ramp up production of its best-selling jet amid an industry-wide shortage of planes and have warned of the potential for damage to cash flow.


Regarding the cash flow impact, Scott Michos, vice president of Milius Research, said, “It’s not entirely clear yet. It certainly makes it more likely.”

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However, Bernstein analyst Caius Slater expects the case to have a “relatively modest” impact on Boeing’s profits and cash flow.


The issue, which affects a portion of the 737 MAX family of aircraft, including the MAX 7, MAX 8, and MAX 8200 aircraft as well as the 737 NG-based P-8 Poseidon Maritime Observer, is not a flight safety issue. Boeing said aircraft in service could continue to operate.


“We see more negative financial exposure to this news at Spirit than at Boeing,” said JPMorgan analyst Seth Sieffman.


In February, the aircraft manufacturer had to pause deliveries of its 787 Dreamliners to perform additional analysis on the fuselage component.

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