Boeing Co. said it will need to repair around 170 already-built 737 Max jets in its storage lots to correct a structural defect that was discovered almost by accident.
(Bloomberg) — Boeing Co. said it will need to repair around 170 already-built 737 Max jets in its storage lots to correct a structural defect that was discovered almost by accident.
That’s complicating matters as the company works to meet demand for new planes that stretches into the early 2030s. And it injects risk into Boeing’s annual cash and delivery goals, crucial steps in the manufacturer’s comeback from years of crisis.
Boeing tapped the brakes on 737 production and deliveries this month when the new issue was uncovered, although it’s still planning to ramp up output by 23% later in 2023, Dave Calhoun, Boeing’s chief executive officer, said Wednesday.
The manufacturing glitch at supplier Spirit AeroSystems Holdings Inc., might not have been discovered at all if not for an eagle-eyed employee, Calhoun said during Boeing’s earnings call.
The person spotted a “procedure that didn’t look right” involving fittings used to attach the vertical fin to a rear section of the fuselage, he said. The flawed process is almost impossible to spot once a sealant has been applied, or after the plane’s tail is locked into place.
“It’s gnarly,” Calhoun said. “An employee raised their hand and noticed a bad procedure and everybody jumped on it. Within a week we had this resolved with the FAA, we had a clear picture of the airplanes that were impacted, and we were all at work on the rework.”
Potentially hundreds of 737 jets built since 2019 are affected and will need to be repaired, according to analysts. The US Federal Aviation Administration has decided that the flaw isn’t a critical safety threat that must be addressed immediately for planes that are already flying commercially.
Fixing a completed jet is likely to take “a few weeks,” Calhoun said. For aircraft that are at the start of the manufacturing process, repairs will take only days.
Boeing’s free cash flow will take a hit in the second quarter, breaking even or declining slightly, Chief Financial Officer Brian West said. He estimates monthly 737 deliveries will be around 30 during the first half of the year, rising to a 40-jet average pace in the second half as the bottlenecks ease.
Boeing is counting on a late-year delivery surge to offset the current slowdown, and that raises the risk it will miss its annual targets.
“You have less time to deal with issues that crop up,” said Robert Spingarn, an analyst with Melius Research, in an interview.
–With assistance from Ryan Beene.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.