Boeing Co's shares experienced a 4.5% drop in premarket trading on Friday as the company paused deliveries of some 737 MAXs following a new supplier quality issue involving Spirit AeroSystems Spirit, responsible for manufacturing fuselage, thrust reversers, engine pylons, and wing components for the 737 MAX airplanes, saw its shares plummet over 11.7%.
Boeing revealed on Thursday that the latest quality concern involves aft fuselage fittings supplied by Spirit and is believed to have originated in 2019. J.P. Morgan analyst Seth Seifman commented, "We see more negative financial exposure to this news at Spirit than at Boeing."
The issue is expected to impact a "significant" number of undelivered 737 MAX airplanes, both in production and storage, and may lead to a decrease in 737 MAX deliveries in the short term. This development occurs as the industry faces a jet shortage.
Seifman remarked that while "Boeing's plans to boost production may need to wait, we think management prioritizes supply chain momentum over inventory management." Melius Research analyst Scott Mikus stated that the effect of the delivery pause on the aerospace giant's cash flow remains uncertain.
Mikus added, "It depends how many aircraft are impacted, how long it'll take to do any inspections and rework."
The problem affects a portion of the 737 MAX family of airplanes, including the MAX 7, MAX 8, and MAX 8200 models, as well as the P-8 Poseidon maritime surveillance aircraft based on the 737 NG. Boeing assured that the issue does not pose a safety risk for flights and that in-service planes can continue to operate.
This setback follows a similar situation in February when the planemaker had to temporarily suspend deliveries of its 787 Dreamliner jets to carry out additional analysis on a fuselage component.
