By Senad Karaahmetovic
Boeing (NYSE:BA) shares are trading about 4.5% lower in premarket Friday after the company warned it could deliver fewer-than-expected 737 Max jets in the near term.
Spirit AeroSystems (NYSE:SPR) incorrectly fitted some parts at the back of a plane, it confirmed in a press release. Boeing was informed of a “non-standard” manufacturing process used on two fittings.
The problem affects some 737 Max 8 planes, as well as Max 7, the 737 8200, and P-8 jets. On a more positive note, the problem is not an “immediate safety of flight issue and the in-service fleet can continue operating safely.“
Still, the issue will affect “a significant number of undelivered 737 Max airplanes, both in production and in storage,” the company said.
“We expect lower near-term 737 MAX deliveries while this required work is completed. We regret the impact that this issue will have on affected customers and are in contact with them concerning their delivery schedule. We will provide additional information in the days and weeks ahead as we better understand the delivery impacts.”
In the meantime, Spirit shares are down over 10% in premarket Friday.
“Spirit is working to develop an inspection and repair for the affected fuselages. We continue to coordinate closely with our customer to resolve this matter and minimize impacts while maintaining our focus on safety,” the company said.
While the news is clearly negative for Boeing, analysts believe the fix shouldn’t be too complex to implement.
“Total unit rework could take time, but ability to be conforming in new production units should not take too long, and the medium-term production ramp which had been recently firming up is still intact,” Goldman Sachs analysts said.
TD Cowen analysts believe Boeing will likely have to cut its full-year deliveries guidance.
“It's not a safety of flight issue, and SPR sees little impact on planes for which the fittings have yet to be installed. Hence, once rework is completed, production should get back on track,” the analysts said.