The Ratings Game: Boeing 737 Max manufacturing issue: ‘When you see one roach, there are likely more,’ analyst says

by | Apr 18, 2023 | Stock Market

Boeing Co.’s recent disclosure that 737 Max production might be hindered by manufacturing issues over parts that help keep the tail on the jets could indicate deeper problems within the jet maker, its suppliers and regulators, BofA analysts said in a note on Monday. The analysts said that after the news dropped on Thursday, they spent much of the next day answering investors’ questions: How much would any fix cost? How many jets were affected? What would the impact be on Boeing

Boeing last week said that the manufacturing issues risked gumming up production and deliveries of “a significant number” of its 737 Max jets. The problem was related to two fittings that help keep the vertical tail on the body of the jet, the BofA analysts said. Boeing said that a supplier — reportedly Spirit AeroSystems Holdings Inc.
— had notified them of a “non-standard manufacturing process” used to install the fittings on some 737 models. “This is not an immediate safety of flight issue and the in-service fleet can continue operating safely,” a Boeing spokesperson said on Thursday. “However, the issue will likely affect a significant number of undelivered 737 Max airplanes, both in production and in storage.” The production and delivery snags are the latest difficulty for the jet, which was grounded in 2019 following two fatal crashes. The Federal Aviation Administration allowed the jets to begin carrying passengers again in late 2020. “First of all, literally thousands of 737s have been produced — why did this issue creep into the process in the first place?” the BofA analysts said. “Secondly, post the 737-Max tragedies, how did this slip through? We, the investment community, we were told the Max was one of the most vetted aircraft in history, given its effective recertification with the FAA. Does the blame lie with Boeing, the FAA or the supply chain or all three?” The analysts continued: “To hit financial targets was there so much pressure on suppliers they felt …

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