Industrials

Boeing (BA) is facing an investigation that will determine if the company failed to ensure that its completed products conformed to their approved design and were in safe operating condition, the Federal Aviation Administration said Thursday. The investigation follows the Jan. 5 incident where a door plug fell off from 737-9 Max Alaska Air passenger jet shortly after takeoff. “Boeing’s manufacturing practices need to comply with the high safety standards they’re legally accountable to meet,” the FAA in an update. The regulator has grounded the 737-9 Max planes and said the timeline for their return would be determined based on safety of the public.

Boeing had burned down its initial $8.3 billion in customer concessions for the original 737 MAX grounding to $1.5 billion by the end of 3Q. Analysts estimates for the MAX 9 grounding range from around $50 million if it stretches through next week to $150 million through January. More seriously, cash flow expectations are also coming down from the 2024 consensus around $6 billion ahead of earnings on Jan. 31. For now, the trims are small, but concerns about a potential slowdown in delivery and production rates have some caution that this could expand to as much as $2 billion.

Boeing (BA) said Tuesday it delivered 67 aircraft in December, up from 56 the previous month, but down from 69 a year earlier. The plane maker said it booked 371 orders last month, up from 114 orders in November and 250 in December 2022, according to data on its website.

Plane maker Boeing’s financial repercussions following an incident involving one of its jets on an Alaska Airlines flight are likely to be relatively contained based on available evidence, say Scott Deuschle and Megan Makini, analysts at Deutsche Bank, in a research note. “Further delays to the MAX-7 certification appears to be the highest probability negative repercussion at this point, though the transparency of this risk had already been rising,” the analysts say, based on information available through 11:45 p.m on Sunday. The FAA ordered a temporary grounding and immediate inspections of dozens of Boeing 737 MAX jets after one of the planes made an emergency landing when a section of the aircraft ripped away in midair. Boeing falls 6.5% to $232.78.

Boeing (BA) 737 Max groundings by the Federal Aviation Administration after the Alaska Air (ALK) accident is a “worrisome” start to the new year, BofA Securities said in a note. Analysts, including Ronald J. Epstein, said that while they see the stock to be weak on the news, they do not expect the issue to have a material impact on their 2024 financial forecast. “Boeing is one of two players in a global duopoly for commercial aircraft which are in short supply, and we believe has been making steady if not slow progress addressing the some of the internal shortfalls that led to its current situation,” the analysts said. The incident closely follows Boeing’s call to airlines to check for loose bolts on 737 MAX rudder systems as well as the company’s request to the FAA for an exemption to safety standards related to engine inlets and anti-ice systems, the