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Boeing finds new 737 MAX defect, threatening delivery target

(Bloomberg) — Boeing Co. discovered that its largest supplier improperly drilled holes in a component that helps maintain cabin pressure of the 737 Max jet, threatening to derail delivery targets for its best-selling model.

The latest issue for Boeing’s cash-cow jet isn’t a safety threat, the Federal Aviation Administration said Wednesday. But it’s another complication for Boeing as it speeds the manufacturing pace of the 737 family while dealing with supply-chain strains and the aftermath of a strike at Spirit AeroSystems Holdings Inc., the supplier that builds about 70% of the narrowbody jet frames.

“During factory inspections, we identified fastener holes that did not conform to our specifications in the aft pressure bulkhead on certain 737 airplanes,” Boeing said via email Wednesday. The inspections have uncovered hundreds of misaligned and duplicated holes in some aircraft, according to a report by The Air Current.

Boeing shares fell as much as 4.2% in after-hours trading on reports of the new Max issue. The stock had gained 20% this year through Wednesday’s close as demand surges for travel and new jetliners.

The manufacturing glitch will cause some near-term 737 delivery delays, including snarling a plane going to the Malaysian Airline System, as Boeing conducts inspections and determines how many models were affected and what work they need, according to the company. Boeing is evaluating whether it will be able to reach its target of delivering 400 to 450 of the 737-family jets this year.

The uncertainty underscores the strain on planemakers Boeing and Airbus, and their global network of suppliers, as they accelerate manufacturing while contending with parts shortages and workforce turnover. Boeing and Spirit had only recently emerged from an earlier disruption to the 737 involving brackets in vertical tail fins.

The latest problem caps a troubled history for the 737 Max. The jet was grounded by regulators worldwide after deadly crashes in Indonesia and Ethiopia in 2018 and 2019, which killed the hundreds of passengers on board. A 20-month span followed during which lawmakers and others denounced the company’s safety culture, leading to billions of dollars in lost sales and other costs. The model’s flight prohibition order was lifted in November 2020 in the US after Boeing made a series of software upgrades and training changes. Other nations then variously followed.

Boeing is still delivering Max as it grapples with the latest supplier headache, which affects some Max 8 models. Spirit uses multiple suppliers for the affected part, known as the aft pressure bulkhead, and not every unit was impacted.

Wichita, Kansas-based Spirit said it has changed manufacturing processes to address the issue and is continuing to deliver 737 Max frames to Boeing’s Seattle factories. “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.

For now, Boeing hasn’t backed off plans to speed up 737 production to a pace of 38-jets a month, the next step in its plan to return output to pre-Covid levels by mid-decade. The time needed to transition to the higher rate will depend on the progress the company makes in resolving the issue with its supplier, Boeing said.

–With assistance from Alan Levin and Danny Lee.

(Updates with background of 737 Max plane in 7th paragraph.)

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©2023 Bloomberg L.P.


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