What happened
Boeing (BA 0.72%) has once again paused 737 MAX deliveries after a new supplier quality problem was discovered. Investors are not pleased, sending Boeing shares down as much as 7% on Friday morning.
So what
Boeing's 737 MAX has been a star-crossed program from the beginning. When it was launched, investors hoped the MAX would end up among the best selling airframes of all time. But a pair of fatal accidents revealed engineering flaws in the plane and its software, leading deliveries to be halted for 18 months.
The plane is airborne once again, and airlines are again interested in buying it, but the drama has not gone away. On Thursday night, Boeing said it was pausing deliveries on some jets because of incorrectly installed parts.
Boeing said it was notified by a supplier, identified as Spirit AeroSystems Holdings (SPR +0.00%), of a "nonstandard manufacturing process" used in the installation of two fittings at the rear of the plane. The companies are working to develop a repair.
NYSE: BA
Key Data Points
Now what
The pause will hopefully be brief, but it does impact Boeing's plan to ramp up production and increase deliveries heading into 2023. Boeing took on substantial debt during the pandemic as demand for planes faltered, and was hoping to use an uptick in deliveries to repair its bruised balance sheet.
The bigger-picture issue is that investors again have a reason to worry about engineering quality at Boeing. In addition to the 737 MAX issues, Boeing last year had to temporarily suspend deliveries of the 787 Dreamliner and 767 due to manufacturing concerns.
Shares of Boeing are still nearly 40% below where they were prior to the pandemic. The discount could be an opportunity for long-term-focused investors. But given Boeing's recent track record, there's good reason to sit on the sidelines for now and force the company to prove it can hit its own manufacturing targets.
