Boeing Stock Drops. This Nagging Problem Worsens.

1 min read

A nagging 737 MAX problem for
is growing which was sending shares lower in early trading Friday.

(ticker: BA) stock was down 2.8% at $185.90 in premarket trading. The problem impacts supplier
Spirit AeroSystems
too. Its shares were off 6.5% at $16.04.
S&P 500
Dow Jones Industrial Average
futures were down 0.3% and 0.1%, respectively.

The problem relates to the quality of holes on some airplanes. Fastener holes in the aft pressure bulkhead might not conform to specifications on some 737 MAX airplanes.

That part of the plane is supplied by Spirit Aeros Systems (SPR). The problem was disclosed back in April, but there are more planes to inspect Boeing initially believed.

Boeing has said that the issue is not an immediate flight safety issue and that 737s can continue to operate safely. “We continue to take the time necessary to ensure each airplane meets our standards and regulatory requirements prior to ticketing and delivery,” the company said in an emailed statement.

Investors have known about the issue for months. And the company has assured it isn’t a safety-related issue. The problem for Boeing stock is it means more work to deliver jets, which can extend times and keep customers waiting.

Boeing wanted to deliver some 400 to 450 MAX jets in 2023. It has delivered 280 through the end of the third quarter including 15 in September. That pace won’t get Boeing to the low end of its guidance range.

Boeing might have to update its guidance when it reports third-quarter financial results on October 25.

The issue has been a bigger deal for the supplier, which derives more than 60% of annual revenue from Boeing.
Spirit Aero
stock was about $36 a share before the defect was first talked about by the companies in April. Boeing shares were about $214 apiece.

That shows, to some extent, the problem is reflected in stock prices. It’s reflected in Wall Street numbers too. At the start of 2023, Wall Street expected Boeing would deliver about 600 planes. That number has dropped to about 550. Sales were projected to come in at about $81 billion. That number is now about $78 billion.

Analysts projected about $6.4 billion in sales for
Spirit AeroSystems
earlier in 2023. That projection is now just under $6.1 billion.

Write to Al Root at [email protected]

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