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

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(Reuters) – Boeing (NYSE:BA) shares fell 2% before the bell on Thursday after the U.S. planemaker warned of delays in near-term deliveries of 737 MAX jets due to a fresh quality issue involving its biggest supplier Spirit AeroSystems (NYSE:SPR).

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% 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% 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.

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