Boeing warns of delays to 737 Max deliveries over production issue

Boeing said on Thursday that a production issue would affect its ability to deliver a “significant” number of 737 Max jets, worsening aircraft shortages for airlines around the world.

The aircraft manufacturer said supplier Spirit AeroSystems had used a “non-standard” process when installing two fittings in the fuselage of certain models of the narrow-body jet, creating the possibility that it might not comply with specifications laid out by aviation regulators.

Shares in Boeing fell more than 6 per cent at the start of trading on Friday. Spirit’s stock dropped more than 17 per cent.

Boeing said the planes could still operate safely, but “the issue will probably affect a significant number of undelivered Max aeroplanes, both in production and in storage . . . We expect lower near-term 737 Max deliveries.”

The delay will deepen headaches for Boeing’s customers, many of whom would like to expand their flying schedules but need to secure more planes to do so. Supply chain difficulties have left Boeing struggling to deliver jets to big customers such as Southwest Airlines. United Airlines and Air India have also placed large orders recently with the flagship US manufacturer.

Michael O’Leary, chief executive of low-cost carrier Ryanair, spoke last month about possibly buying more planes from Boeing. The latest delay, however, could prompt the resumption of earlier complaints about Boeing’s inability to deliver.

A delay in deliveries also will hamstring Boeing’s cash flow, since it receives the bulk of payment for a jet upon delivery. The company reported $2.3bn in free cash last year, the first time in three years that it generated more cash than it spent. Investors consider free cash — operating cash minus capital expenditures — a primary measure of Boeing’s financial health.

Boeing has been trying to move past the turmoil that has gripped the company since two fatal crashes of the 737 Max in 2018 and 2019 prompted a worldwide grounding of the plane, followed by plummeting demand for air travel with the onset of the Covid-19 pandemic. It has struggled with production problems, from building Air Force One to glitches on the 787 that halted deliveries for all but two months between October 2020 and August 2022.

Boeing said it had notified the US Federal Aviation Administration of the production problem and would inspect the jets to find and replace the “non-standard” fittings.

Spirit said it was working with Boeing to resolve the problem “and minimise impacts”.