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Why Boeing Stock Was Down Today

Motley Fool - Thu Aug 24, 3:30PM CDT

What happened

Boeing (NYSE: BA) has discovered a new issue with its 737 MAX jet that could threaten the company's delivery targets. Investors are disappointed to see yet another setback, sending Boeing shares down 4.9% on Thursday.

A Boeing 737 MAX in midair.

A Boeing 737 MAX. Image source: Boeing.

So what

The 737 MAX was once expected to be among the best-selling jet designs of all time, but the program has been plagued with issues. A pair of fatal crashes led to a 20-month grounding of the jet between 2018 and 2019, and Boeing is only now starting to ramp up production after those delays and pandemic-related uncertainty.

Overnight, word got out that Boeing has discovered an issue in a component that helps maintain cabin pressure inside the 737 MAX. The blame appears to fall on supplier Spirit AeroSystems (NYSE: SPR), which saw its stock sell off significantly on Thursday, but Boeing shares are still heading downward.

Boeing is holding off delivering affected planes until the issue is fixed, but it continues to deliver unaffected jets to customers. The company said it is still evaluating whether it will be able to deliver the 400 to 450 planes it targeted for 2023, but with only 17 deliveries so far in August (compared to 32 in July), it appears that goal could be in jeopardy due to this issue.

Now what

The issue is likely to be short-lived, and it does not appear to be Boeing's fault, but it is still another black eye for a company that has had a hard time proving to investors it can execute in recent years.

And Boeing has no easy fix for these issues, since Spirit is tightly intertwined with the aerospace giant's supply chain. Some on Wall Street have suggested Boeing should acquire Spirit, a former subsidiary, to take control of its supply chain, but the company has dismissed that idea.

For now, if nothing else, the incident is a reminder to investors of the complexity of Boeing's supply chain, and that a lot can go wrong as the company tries to plot a post-pandemic comeback story. Even in the best-case scenario, patience will be needed as Boeing tries to regain altitude.

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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