Boeing falls on new 737 Max jet fears

Boeing shares fell as much as 3% yesterday after the US aviation regulator found a new flaw in the 737-Max jet, potentially delaying the aircraft’s return to service and piling more pressure on the planemaker’s suppliers.

Boeing was forced to ground its jet worldwide earlier this year following two fatal crashes, sending shockwaves through the global aviation sector.

The single-aisle 737, the world’s most-sold commercial aircraft, is central to Boeing’s future with more than 5,000 orders and a backlog valued at nearly $500bn (€440bn) at list prices.

Barclays analyst Christopher Keyworth said any further delay in the return of the jet to service could have financial implications for aircraft parts suppliers as well as airlines, which have already warned of a hit to their 2019 profits due to the groundings.

“We now anticipate a widespread ‘supplier reset’, with 2020 impact not yet factored into consensus,” Mr Keyworth wrote in a note, downgrading UK-based aero supplier Senior to “equal weight”.

The US Federal Aviation Administration (FAA) did not elaborate on the latest setback, but sources said that the flaw was discovered during a simulator test last week.

It was not yet clear if the issue could be addressed with a software upgrade or would require a more complex hardware fix.

“While we expect BA [British Airways] to eventually reinstate the Max and return to targeted, normalised cash flows, we think the timeframe is unknowable,” Credit Suisse analyst Robert Spingarn said.

“For now, we think investors should expect continued volatility as BA and the regulators work behind closed doors to ferret out any additional issues.”

Reuters