Boeing shares fall after new Dreamliner delivery halt

February 25, 2023 3:50 pm

[Source: Reuters]

Shares of Boeing Co (BA.N) fell nearly 5% on Friday after the U.S. planemaker temporarily halted deliveries of its 787 Dreamliner jets over a documentation issue related to a fuselage component.

Boeing, after reviewing certification records, on Thursday said it “discovered an analysis error by our supplier related to the 787 forward pressure bulkhead,” leading to a pause in deliveries months after they were allowed to resume in August.

Boeing shares closed down 4.79% to $198.15.

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The latest hiccup in 787 deliveries should not result in any design changes and jets in service would be expected to continue to fly, analysts said.

Boeing had expected to deliver 787s this month prior to the issue being found, a person familiar with the matter said. Those deliveries will now be delayed until Boeing obtains approval from the Federal Aviation Administration.

“An unwelcome blast from the past, but hopefully a brief one,” J.P. Morgan analyst Seth Seifman said in a note, adding that deliveries of 787 jets are the main drivers of $1.7 billion of year-on-year cash flow growth that Boeing projects.

The planemaker said the error was found while working through the process to extend the operating timeline for a key part.

The current issue is unrelated to a previous quality problem involving gaps around the forward pressure bulkhead that was discovered by the FAA in 2021 and contributed to a delivery stoppage that lasted until August 2022.

When Boeing obtained approval from the FAA to restart Dreamliner deliveries, the company said it was required to outfit those 787s with a modified version of the forward pressure bulkhead that would resolve previous quality problems.

That version of the component was given a temporary operational limit of four years, providing Boeing time to update its documentation.

The component acts as a barrier between the pressurized interior cabin and the radome (or nose cone). It was supplied by Spirit AeroSystems (SPR.N), which said it was too early to assert it made the “analysis error.”

Shares of Spirit were down 3.7%.

The erroneous data analysis was submitted several years ago and was discovered by Boeing this past week, according to the person familiar with the issue.

“We are pausing deliveries while we update our analysis and submit any required certification deliverables to address the noncompliance,” Boeing said.

Separately, Boeing said it is replacing a noncompliant component on some undelivered 787s. The trim air muffler, part of the Collins Aerospace-made cabin air distribution system that regulates air temperature, muffles the sound of hot air before it enters the cabin.

Boeing said it is coordinating closely with the FAA and customers to determine which 787s will need the muffler replaced. The issue said is not connected to the delivery stoppage and does not pose a safety problem, the company said.