Boeing shares fall as 737 delivery goal at risk from defect involving Spirit

Aerospace behemoth Boeing's shares fell 2 per cent before the bell on Thursday after the US planemaker warned of delays in near-term deliveries of 737 MAX jets due to a fresh quality issue involving its biggest supplier Spirit AeroSystems.

This could put pressure on the top end of Boeing's annual 737 delivery target of 450 planes, some Wall Street analysts warned even as the planemaker said it was evaluating that goal.

It is for the second year that Boeing's delivery targets are under review, after supply-chain issues forced it to temper its goal last year. The latest quality issue is due to improperly shaped holes in the aft pressure bulkhead of some planes.

The bulkhead is a structure that seals off the rear of the pressurized cabin. The parts in question were made by Spirit, whose shares were down 6 per cent in premarket trading on Thursday.

But not all 737 fuselages will be impacted as Spirit uses multiple suppliers for the aft pressure bulkhead.

Boeing believes the defect is limited to a portion of its bestselling MAX 8 model, but was evaluating if older-model 737 Next Generation jets have also been impacted.

"It is early days on both the near and long-term financial impacts of the issue, but it appears the fix is likely to take several weeks for completed aircraft," Citi analyst Jason Gursky said in a note.

The defect also piles up more pressure on supplier Spirit after it took a financial hit from a another quality issue this year.

Earlier this month, its shares tanked 27 per cent after it forecast bleak annual cash flow due to a hit from a worker strike. However, Spirit on Wednesday ruled out any material impact to its delivery range for the year due to the latest issue.

Boeing is an American multinational corporation that is a major player in the aerospace industry. Founded in 1916 by William E. Boeing in Seattle, Washington, Boeing has become one of the world's largest and most recognised aerospace and defense manufacturers over the years.

The company is renowned for its commercial aircraft, including the iconic 737, 747, 767, 777, and 787 families of airplanes. These aircraft are used by airlines around the globe for both short-haul and long-haul flights.

Boeing is also a major defense contractor, producing various military aircraft, satellites, and defense systems. This division provides a wide range of products and services for government and military customers worldwide.

However, Boeing has faced significant challenges and controversies in recent years, notably related to the grounding of its 737 MAX aircraft following two fatal crashes. The company has been working to address these issues, enhance safety measures, and restore trust among customers and regulators.

(With inputs from Reuters)