At Boeing, the hits just keep coming. A new electrical issue on Boeing's 737s will take time to correct, Bank of America analyst Ronald Epstein wrote in a note seen by Fortune. “This could further impact the timing of deliveries, despite the uncertainty surrounding the number of aircraft affected by this issue,” he wrote Monday.
Boeing was forced to slow production at its 737 factory in Renton, Wash., last week because of an issue with junction boxes, which are used to rout electrical cables through planes, Seattle’s King 5 news first reported.
Boeing confirmed in a statement to Fortune that the company identified a “nonconforming component” on three already delivered airplanes, leading to their grounding.
“Per our standard process, we will perform any necessary rework on airplanes in our production system to ensure they meet all requirements prior to delivery,” a Boeing representative said, noting that production hasn’t stopped at the Renton factory.
The production delay comes after a string of tragic mishaps at the company. Two 737 Max crashes in 2018 and 2019 that killed 346 people ultimately led Boeing to plead guilty to fraud for misleading the Federal Aviation Administration when it evaluated the safety of its then-new line of planes.
And after a door plug flew off a 737 Max plane in January, leading to a flight of pure “chaos” for passengers and crew, Boeing’s struggles to fix its aircraft-manufacturing process once again entered the spotlight.
More recently, flaws in a space capsule Boeing built for NASA have forced two astronauts at the International Space Station to delay their return trip for months.
Boeing’s new CEO, Robert “Kelly” Ortberg, will have his hands full attempting to fix the delays. Boeing’s stock has paid the price amid all this drama, plummeting more than 33% year to date.
That’s partly because its production issues are starting to impact the bottom line. The company more than tripled its operating loss to $1.4 billion in the second quarter amid a steep drop in deliveries of new airline planes, including the 737 Max.
Still, most analysts remain bullish on shares of Boeing. Some 17 Wall Street analysts have buy-equivalent ratings on Boeing stock, according to Wall Street Journal data, while 10 have hold ratings and just two have sell-equivalent ratings.
BofA’s Epstein reiterated his “neutral” rating and $200 price target for shares of Boeing on Monday, implying a potential 19% return for shareholders over the next 12 months.
