Boeing Shares Plunge 8.55% on Aircraft Production Concerns
Boeing Company's stock fell by 8.55% to $227.7 in pre-market trading following the detachment of a door from an Alaska Airlines Boeing 737 Max 9 aircraft. The incident led to the grounding of 171 planes and raised doubts about the manufacturing reliability at Boeing.
Investigation Underway
The National Transportation Safety Board (NTSB) is investigating this concerning event, focusing on Boeing's manufacturing operations surrounding the door mechanism. The issue has strained Boeing's relationship with one of its primary suppliers, Spirit AeroSystems, prompting a closer inspection of its processes following recent quality issues.
Richard Aboulafia, a former transportation safety committee member, has expressed concerns over potential manufacturing deficiencies related to the door locking mechanisms and stressed the necessity of a comprehensive investigation.
Boeing has assured its full cooperation with regulatory authorities and customers, requesting an immediate inspection of similarly designed 737-9 aircraft. Analysts anticipate possible disruptions to Boeing's manufacturing plans for 2024.
Turkish Airlines has grounded several of its aircraft pending safety verification (Associated Press)
Potential Slowdown
Bloomberg quotes analysts who project a potential slowdown in Boeing's manufacturing pace, which could impact the company's delivery goals for the year. This comes at a critical time for Boeing, as investors expect an increase in cash flow and a return to pre-2019 production rates.
The company is under pressure to uphold quality standards and deliver flaw-free airplanes, crucial for customer confidence. CEO Dave Calhoun is facing a series of quality lapses that shake investor confidence in his leadership. Calhoun previously stated his commitment to stabilizing the company after the turbulent fallout of two fatal 737 Max crashes nearly five years ago, referring to this period as an "important transitional year."
Following these incidents, China's Beijing has halted deliveries of 737 Max to its airlines.
Recently, Boeing had to delay deliveries due to structural issues with the aircraft, particularly in the rear section. By the end of December, Boeing had delivered more than 1,370 units of the 737 Max and received orders for 4,000 more.
