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Spirit AeroSystems acknowledged a quality issue affecting some Boeing 737 models.
Emmanuel Dunand/AFP via Getty Images
Boeing
stock dropped on Thursday amid worries about a quality issue linked to supplier
Spirit AeroSystems
that affects some 737 models. While it’s not an immediate safety problem, aircraft deliveries from the manufacturer are at risk.
Boeing
(ticker: BA) said in a statement that it identified fastener holes that didn’t conform to its specifications in the aft pressure bulkhead on certain 737 airplanes. The airplane maker said it was not an immediate flight safety issue and that 737s can continue to operate safely. But delivery targets look vulnerable.
“This issue will impact near-term 737 deliveries as we conduct inspections to determine the number of airplanes affected, and complete required rework on those airplanes,”
Boeing
said. “We continue to deliver 737s that are not affected.”
Shares in Boeing (ticker: BA) retreated 2% in premarket trading.
Spirit AeroSystems
(SPR) stock was down 6%, though the supplier—which acknowledged the problem in a statement—described a more upbeat outlook for its own deliveries to Boeing. “Based upon what we know now, we believe there will not be a material impact to our delivery range for the year related to this issue,” Spirit said in a statement.
A drop is understandable. The 737 versions are most likely 737 MAX jets, which account for almost all 737 deliveries these days. Boeing didn’t immediately respond to a request for comment about which 737 models were affected. Investors are highly attuned to MAX issues. The plane was grounded worldwide in early 2019 following two deadly crashes inside five months. The plane re-entered service in late 2020 and hasn’t had issues since then.
Boeing investors, however, are going to have to get used to hearing more detail about manufacturing. The company has made an effort to be more transparent in the wake of the MAX issue. CEO Dave Calhoun has emphasized transparency several times since he took over in early 2020 amid the MAX issues. Since then, Boeing has disclosed more about issues with MAX and 787 jets that have introduced some stock volatility.
Management’s guidance for 737 deliveries in 2023 is 400 to 450 units. Boeing has delivered 243 planes through July, including 32 in July. The July pace puts the company on track for more than 400. Investors will have to watch to see what happens to deliveries in the coming months.
Extra rework to correct issues might add cost, but investors are probably more worried about hitting delivery guidance than 2023 earnings. They are still depressed. Boeing is expected to lose about $2.45 a share this year. Earnings are expected to turn around and hit about $9 a share by 2025. Boeing earned $16.01 a share in 2018, the year before MAX issues and the Cocid-19 pandemic.
Write to Jack Denton at jack.denton@barrons.com and Al Root at allen.root@dowjones.com