Boeing is facing yet another hurdle in its efforts to ramp up production and deliveries of the 737 MAX aircraft. The company announced this week that its supplier, Spirit AeroSystems, discovered improperly drilled holes in the fuselages of some 50 already-built 737s. This latest issue will require reworking those planes before they can be delivered to airlines.
Misaligned Holes Discovered During Inspection
Spirit AeroSystems, which produces 70% of the 737’s structure in Kansas, found the problem with fuselages as they were undergoing maintenance requirements. Specifically, some rivet holes near the nose of the affected planes have been drilled incorrectly and do not align with assembly jigs.
This problem was initially discovered on one aircraft fuselage, but further inspections found the issue on sections for 49 additional 737s already produced but not yet delivered to Boeing. Without rectification, the misalignment could compromise the structural integrity of the fuselage over time.
Boeing has confirmed that the necessary rework will impact the delivery timeline for some of the affected planes:
“Boeing is actively working with our customer and regulators on a path to certification to safely deliver undelivered airplanes while we perform the necessary rework on select fuselage frames.”
So when will things return to normal? That remains uncertain at this stage:
“We will continue to take the necessary time to ensure Boeing airplanes meet the highest quality prior to delivery,” the company said. “Across the enterprise, our teams remain focused on safety and quality while fulfilling our customer commitments.”
|50 Boeing 737 MAX
|Misaligned rivet holes near nose section
|Rework needed before delivery
This latest setback comes as Boeing tries to turn a corner from years of crises that first stemmed from two fatal 737 MAX crashes. Those tragic accidents set off a lengthy grounding of the jet due to flight control issues. Boeing had to redesign software and implement other fixes before authorities cleared the MAX to fly passengers again in late 2020.
Production Setbacks Continue to Plague Boeing
Since resuming 737 MAX deliveries, Boeing has struggled to stabilize production. Its Renton, Washington factory has grappled with supply chain shortages, parts delays, and labor shortages coming out of the pandemic. Despite planning to ramp up, Boeing delivered just 387 commercial jets last year – far short of its original 600 target.
Now, problems from Kansas-based Spirit AeroSystems risk slowing output further. This Tier 1 supplier produces large 737 structural components like fuselages and sends completed sections to Boeing for final assembly. Any hiccups at Spirit can directly impact Boeing’s production system.
Aviation analyst Richard Aboulafia summed up the continued headaches:
“This is yet another production problem affecting Boeing’s key profit driver. For a program so critical to Boeing’s future, these ongoing manufacturing issues are troubling.”
Aboulafia also pointed blame at management, tweeting:
“I’m struggling to think of a historical parallel for the scale & duration of Boeing’s inability to master 737 production, other than perhaps McDonnellDouglas in the 1990s. At this point it’s a failure of leadership & culture.”
Boeing insists it is working closely with Spirit to prevent future issues. In their joint statement, the companies said:
“We will ensure every airplane is built with precision and excellence – safey and quality are top priorities through our entire production system.”
Nonetheless, the discovery has already disrupted Boeing’s delivery plans with airlines awaiting new 737 MAX jets.
New Headwinds for Boeing’s 737 Recovery Efforts
This latest fuselage problem adds frustration for airlines counting on timely deliveries of new narrowbody jets. Carriers worldwide have hundreds of 737 MAX planes on order as they look to modernize fleets and meet surging post-pandemic travel demand.
But Boeing’s assembly woes continue causing delays that inhibit fleet growth plans. Some airlines, like Ireland’s Ryanair, have voiced annoyance to investors over lagging Boeing production issues that pushed back delivery targets.
Now, the fuselage problems will postpone hand overs for several more customers. Alaska Airlines and Southwest Airlines both acknowledged they expect later deliveries on some 737s orders due to the needed rework.
In a statement, Alaska Air said:
“We are working closely with Boeing to understand the impact to our order book.”
Southwest, which ordered hundreds more 737 MAX jets last year, also cited likely delays over the problem.
With air travel demand booming globally, carriers were hoping this would be the year reliable 737 MAX deliveries powered expansion. This latest hurdle dashes those hopes of a smooth production ramp up. It raises real questions around Boeing’s ability to fully stabilize 737 output this year as planned.
Boeing’s Stock Drops on Latest Snag
Perhaps unsurprisingly, Boeing’s stock trended down nearly 4% the day after announcing the fuselage issue. The market frustration comes after the company just reported strong Q4 earnings last week that beat expectations.
This drilling problem sparked new jitters among investors that Boeing may continue facing serious operational and cultural issues in getting flagship commercial programs like the 737 back on track.
One analyst, Sheila Kahyaoglu of Jefferies, directly called out this risk in a note to investors:
“The broader issue for Boeing is that there are still latent manufacturing issues even after the effort and cost to remediate supply chain challenges and internal production processes over the past two years.”
Kahyaoglu trimmed her full year 2024 delivery forecast by 15 aircraft and suggested the cost to rework could reach $1 billion – putting pressure on profit margins for Boeing’s commercial unit.
Until Boeing proves it can sustain smooth 737 production, the company may struggle to regain Wall Street confidence. As programs like the 737 MAX serve as key cash drivers now and into the future, ongoing delays or internal process issues present a real concern.
What Comes Next?
In the short term, the focus turns to Spirit AeroSystems conducting the needed fuselage rework before shipment to Boeing’s Washington facilities. Boeing will then have to schedule the repaired sections into its final assembly process.
The company did not give a timeline but indicated customer delivery dates will slide to the right as resources are redirected.
Longer term, this continues a worrying trend of quality issues emerging from the Boeing production system over the past few years. It raises questions whether systemic process problems or cultural factors enable defects to crop up far down the manufacturing pipeline.
Until Boeing can demonstrate a smooth, steady 737 production tempo in line with plans, uncertainty hangs over the overall recovery timeline. After targeting aircraft delivery ramp ups repeatedly since 2020, ongoing delays remain disappointing.
For airline customers awaiting new jets, the situation grows increasingly frustrating. And for invested shareholders, belief in Boeing’s execution continues slowly eroding.
Both will watch anxiously now as Boeing works to rectify these fuselages and restart momentum toward delivery targets in 2024. After years of crises and criticism, the pressure mounts for CEO David Calhoun to oversee tangible production progress this year.
Without that, criticism over the long troubled 737 program won’t dissipate anytime soon.
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