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The Air Current first reported the news, saying Boeing had identified a manufacturing quality issue on the 737 Max arising from structural assembly work on the jet’s aft pressure bulkhead conducted by supplier Spirit AeroSystems (NYSE:SPR).
“Because Spirit uses multiple suppliers for the aft pressure bulkhead, only some units are affected. Spirit will continue to deliver units to Boeing,” the supplier said in a statement.
Spirit shares fell 6.4%.
The latest developments will raise concerns about Boeing’s ability to meet its delivery target for the 737.
“Spirit has implemented changes to its manufacturing process to address this issue. We are working closely with our customer to address any impacted units within the production system and address any needed rework. 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 added in a statement.
Citi analysts believe it is to discuss the near and long-term financial impacts of the issue, although “it appears the fix is likely to take several weeks for completed aircraft, which likely puts pressure on Boeing’s delivery forecast for the year.”
“We expect management to provide an update on the issue in early September at an investor conference. Shares are likely to see some pressure on Thursday,” they said in a client note.
Wolfe Research analysts added:
“This issue once again highlights the generally bumpier ride on the road to recovery in the aero OEM landscape. BA remains worth the bumpy ride given the FCF track record and we see HWM and HXL as OEM plays with the least drama.”
