Boeing Stock Slides on Fresh Production Issues Tied to 737 Max Jets

By Adriaan Brits Friday, April 9, 2021

Boeing stock price opened lower on Friday after the world's largest aerospace company confirmed that it is inspecting issues related to an electrical power system in its troubled 737 Max jets.

Boeing facility in Washington.

737 Max Can’t Catch a Break

In a brief statement released today, the aerospace business said that it advised 16 of its customers to inspect and verify a potential issue tied to the electrical power system installed in 737 Max. The news prompted a pre-market selloff in Boeing stock.

“The recommendation is being made to allow for verification that a sufficient ground path exists for a component of the electrical power system. We are working closely with the U.S. Federal Aviation Administration on this production issue. We are also informing our customers of specific tail numbers affected, and we will provide direction on appropriate corrective actions,” the company said in a statement.

The embattled 737 MAX airplane returned to service last November after spending the past 20 months grounded after being hit with a safety ban. Two 737 Max airplanes crashed to kill 346 people in early 2019. The grounding sent Boeing stock to trade sharply lower.

Reuters reports that the latest problem 737 Max airplane is experiencing is not related to a key safety system called “MCAS,” which was the centerpiece of the investigation that ultimately led to the wider safety grounding.

In a separate statement, Southwest Airlines said that as many as 30 of its 58 737 MAX 8 airplanes were affected by the notification issued by the company. The aerospace business plans to use other planes from its fleet to replace the grounded 737 MAX airplanes.

Boeing has taken legal action against and canceled contracts with the Air Force One supplier as a result of delays in completing interior work on two modified 747-8 aircraft. The aerospace business giant announced it had canceled contracts “with GDC Technics ... due to their insolvency and failure to meet contractual obligations.”

The company has filed a lawsuit with the Texas state court this week as delays have caused “millions of dollars in damages to its business and threaten to jeopardize work that is of critical importance to the (US Air Force) and the president of the United States.”

Back in 2018, the aircraft-making business received a $3.9 billion contract to build two 747-8 planes for Air Force One, scheduled for delivery by December 2024. The Air Force One supplier “agreed to design and build the interior” of the two Air Force One airplanes, which is about “one year behind schedule in meeting its contractual obligations,” the aerospace business titan noted in its lawsuit.

The modified Boeing 747-8s are built by the company to be an airborne White House, meaning they are built to fly in the worst conditions, including nuclear war, and feature military avionics, advanced communications, and a self-defense system.

Boeing stock price trades 1.8% lower today after its recovery peaked in March, to result in a one-year high. Last year, Boeing stock hit the lowest levels in eight years amid the pandemic-driven selloff, as well as lingering issues tied to its 737 Max airplane.

Summary

Boeing stock is trading under pressure today after the company made a recommendation to 16 of its customers to inspect and verify a potential issue tied to the electrical power systems on its 737 Max airplane.

About the Author


Headshot for author Adriaan Brits
As an analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in Advanced Analytics & Media.

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