Boeing is reportedly close to solidifying an order with Japan Airlines (JAL) for at least 20 of its 737 Max planes. The news on Wednesday followed confirmation from Boeing that certain aircraft deliveries are facing delays. BA stock inched lower Wednesday.
Boeing Japan Airlines Deal
The Japan Airlines order will likely consist of both 737 MAX 8 jets and the larger 737 MAX 10 planes. JAL confirmed with Bloomberg it was in discussions to buy new jets but declined to comment further.
Boeing reportedly beat out rival Airbus and its line of A320neo planes to secure the deal.
It's the second major Boeing deal in Japan in two years after All Nippon Airways (ANA) ordered 20 Boeing 737 MAX 8 aircraft and two 777 Freighter 8 planes last July.
Delivery Delays
On Tuesday, Boeing confirmed it was facing supplier issues for its 767 freighter and KC-46 tanker aircraft, Reuters reported. The statement followed reports from aviation publication The Air Current on Monday that Boeing has not delivered any 767 jets so far this year due to complications with its center fuel tank made by supplier Triumph Group.
Triumph's aerospace structures unit, which Triumph Group sold last July, reportedly did not complete the cleaning and paint adhesion process before delivering the fuel tanks. Boeing acknowledged the "quality issue" forced the company to rework the aircraft, which requires removing the primer insider the tankers and repainting them.
Boeing declined to comment on how many aircraft could be affected, but said it did not change its delivery plans for the year. The Air Current reported that the issue could affect more than a dozen aircraft currently in inventory, as well as delivered planes going back to 2021.
Stalled Software
Also Monday, Leeham News reported that a software problem delayed some 737 Max deliveries up to a year. The Option Selection Software may require reconfiguration for aircraft deliveries from one customer to a different buyer.
However, Boeing told Reuters the issue doesn't affect the company's delivery timing or outlook, and it expects to deliver 400 737 Max planes this year. It's more of a documentation problem and will not require a software rewrite, Boeing says.
In a research note Monday, TD Cowen analyst Cai von Rumohr wrote this is not a new issue, as Boeing has known for over a year. Cockpit software such as the Options Select Software can differ by operator. And updates can be required for deliveries to customers other than the original purchaser. However, the problem was "well understood," and won't cause any incremental impact to projected deliveries, von Rumohr said.
Jefferies analyst Sheila Kahyaoglu noted Monday that it could impact 30 to 40 aircraft, but won't have any incremental impact to projected deliveries.
BA Stock
BA stock dipped 0.3% Wednesday on the news. Shares are up 8.8% so far this year.
Boeing stock is up not quite 19% from a cup-base breakout in November. The stock has consolidated, trading sideways since mid-January. That gave the 50-day moving average time to catch up with the stock's climb.
Shares are now testing that level of technical support. A rebound from the 50-day line would mark an early entry possibility for aggressive investors.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
