Boeing halts deliveries of some 737 MAXs amid new supplier problem

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WASHINGTON (Reuters) -Boeing has halted deliveries of some 737 MAXs as it grapples with a new supplier quality problem by Spirit AeroSystems (NYSE:SPR) that could stretch back to 2019, the U.S. planemaker disclosed on Thursday.

The issue will likely affect a “significant” number of undelivered 737 MAX airplanes both in production and in storage, and could result in lowered 737 MAX deliveries in the near term, the company said.

Boeing (NYSE:BA) shares fell 5.3% and shares of Spirit AeroSystems fell 11.8% in after hours trade following the announcement.

The problem, which affects a portion of the 737 MAX family of airplanes, including the MAX 7, MAX 8 and MAX 8200 airplanes as well as the P-8 Poseidon maritime surveillance aircraft based on the 737 NG, is not a safety of flight issue and in-service planes can continue to operate, Boeing said.

The Federal Aviation Administration said it had “validated” Boeing’s assessment that there was no immediate safety issue “based on the facts and data Boeing presented” and the agency will evaluate all affected aircraft before delivery.

The problem involves the installation of two fittings that join the aft fuselage made by Spirit to the vertical tail, which were not attached correctly to the structure of the fuselage before it was sent to Boeing. Certain versions of the aircraft, like the MAX 9, use fittings from different suppliers and were correctly installed.

Boeing was officially notified about the problem by Spirit on Wednesday, however the problem is believed to date back to 2019 and the company is still determining how many aircraft could be impacted, Boeing said.

Boeing declined to comment on whether the problem will force it to roll back plans to boost 737 production this year as it races to deliver at least 400 MAXs in 2023. The company, which announced deliveries of 111 MAXs over the first quarter, had aimed to increase monthly MAX production rates from 31 to 38 by June.

“We have notified the FAA of the issue and are working to conduct inspections and replace the non-conforming fittings where necessary,” Boeing said. “We regret the impact that this issue will have on affected customers and are in contact with them concerning their delivery schedule.”

United Airlines said late Thursday after discussions with Boeing that “at this time we do not expect any significant impact on our capacity plans for this summer or the rest of the year.”

Spirit said it is working to develop an inspection and repair for the affected fuselages. Officials said the FAA is likely to issue an airworthiness directive that would mandate an inspection and repair regime.

The FAA has closely scrutinized Boeing aircraft since two fatal plane crashes in 2018 and 2019. The FAA continues to inspect each 737 MAX and 787 aircraft before an airworthiness certificate is issued and cleared for delivery. Typically the FAA delegates airplane ticketing authority to the manufacturer.