Boeing is facing headwinds as they were forced to temporarily halt test flights for their new 737 MAX aircraft. This comes just days before the aerospace manufacturer was preparing to make their first 737 MAX delivery to a customer. It is suspected that the temporary hold on test flights was due to engine issues but Boeing assurances that they are sticking to the plan of delivering the MAX this month and production will continue.
American Airlines, Southwest and Shandong Airlines have all placed orders for the new MAX 737. An Indian airline, SpiceJet also placed an order for 205 new planes from Boeing. SpiceJet’s deal is valued at $22 billion and Boeing expects to deliver first MAX 737’s to the Indian airline by 2018.
“This doesn’t look like a serious concern because Boeing says it still expects to deliver the first 737 MAX this month and the engine ‘problem’ is not a design shortfall but what appears to be an easily fixable sub-tier supplier component issue,” said Cai von Rumohr of Cowen. http://on.ft.com/2qw2bB9
The aerospace manufacturer said that they were notified of a potential issue involving turbine engine disks manufacturing by the supplier CFM International. Though they haven’t experienced any problems with the discs in more than 2,000 hours of testing, Boeing wanted to take every precaution to avoid any serious issues in the future. CFM is a joint venture between General Electric and French-based Safran.
“Out of an abundance of caution, we decided to temporarily suspend MAX flights,” Boeing told BBC. They continued saying, “The step is consistent with out priority focus on safety for all those who use and fly our products.” http://bbc.in/2q6NiUw
Jamie Jewell, spokeswoman for CFM reported that the company had two sources for the discs in question and no anomalies were found with the second supplier. She refused to give the name of the supplier which delivered the component that brought test flights to a halt however she insisted that there had been no sign of any issues with the engines during months of flight testing, but they will still be recalled and the problems addressed.
Boeing’s shares stumbled after news broke about the temporary halt of MAX test flights. Shares were down around 4% before recovering slightly before the closing bell.
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