SEATTLE- Boeing faces a new setback with an electrical issue affecting its 737 aircraft. Bank of America analyst Ronald Epstein warns this problem could delay deliveries, impacting Boeing’s production timeline.
The issue centers on junction boxes, crucial components for routing electrical cables through planes. Boeing has identified a “nonconforming component” in three delivered aircraft, leading to their grounding.
Boeing 737 New Issue
Production at Boeing’s Renton, Washington factory has slowed due to this problem. The company states it will perform necessary rework on affected planes before delivery, emphasizing that production hasn’t completely halted, reported Fortune.
This latest issue adds to Boeing’s recent troubles. The company is still recovering from the fallout of two fatal 737 Max crashes in 2018 and 2019, which resulted in 346 deaths. These incidents led to Boeing pleading guilty to fraud for misleading the Federal Aviation Administration during the 737 Max’s safety evaluation.
The company’s stock has plummeted over 33% year-to-date, reflecting investor concerns. Boeing’s second-quarter operating loss tripled to $1.4 billion, primarily due to reduced deliveries of new aircraft, including the 737 Max.
Newly appointed CEO Robert “Kelly” Ortberg faces the challenge of addressing these manufacturing issues and production delays. The company’s ability to resolve these problems swiftly is crucial for maintaining customer confidence and regulatory compliance.
Despite these setbacks, Wall Street analysts remain optimistic about Boeing’s stock. According to Wall Street Journal data, 17 analysts maintain buy-equivalent ratings, 10 have hold ratings, and only two have sell-equivalent ratings.
Bank of America analyst Ronald Epstein reiterates a “neutral” rating with a $200 price target for Boeing, suggesting a potential 19% return over the next 12 months.
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