Boeing discovers a new flaw in the 737 MAX, which threatens delivery target

(Bloomberg) — Boeing has discovered that its largest supplier improperly drilled holes in a component that helps maintain cabin pressure for the 737 Max, threatening to derail delivery goals for its best-selling model.

The Federal Aviation Administration said Wednesday that the latest issue with Boeing’s cash cow plane does not pose a safety threat. But it presents another complication for Boeing, as it accelerates manufacturing of the 737 family while dealing with supply chain pressures and fallout from a strike at Spirit AeroSystems Holdings Inc., the supplier that builds about 70% of narrowbody aircraft frames.

“During factory inspections, we have identified mounting holes that did not meet our specifications in the rear pressure rail on some 737 aircraft,” Boeing said by email on Wednesday. Inspections have revealed hundreds of perverted and repeated holes in some planes, according to a report by The Air Current.

Boeing shares fell as much as 4.2% in after-hours trading on reports of a new Max version. The stock is up 20% this year through Wednesday’s close on higher demand for travel and new aircraft.

The manufacturing defect will cause some delays in 737 deliveries in the near term, including the disruption of a plane bound for the Malaysian Airlines system, as Boeing conducts inspections and determines how many models are affected and what work is needed, according to the company. Boeing is assessing whether it will be able to reach its goal of delivering 400 to 450 aircraft of the 737 family this year.

The uncertainty highlights the strain on planemakers Boeing and Airbus, and their global network of suppliers, as they accelerate manufacturing while grappling with parts shortages and workforce turnover. Boeing and Spirit have only recently emerged from an earlier turbulence of the 737, which includes arches in the vertical tail fins.

The latter problem culminates in the turbulent history of the 737 Max. The plane was grounded by regulators around the world after two fatal crashes in Indonesia and Ethiopia in 2018 and 2019, killing hundreds of passengers on board. What followed was a 20-month period during which lawmakers and others denounced the company’s safety culture, resulting in billions of dollars in lost sales and other costs. The no-fly order for the model was lifted in November 2020 in the United States after Boeing made a series of software upgrades and training changes. Then other countries followed differently.

Boeing is still delivering the Max while facing its latest supplier issues, which affect some Max 8 models. Spirit uses multiple suppliers for the affected part, known as the backpressure bulkhead, and not every unit is affected.

Spirit, based in Wichita, Kansas, said it changed manufacturing operations to address the problem and continues to deliver 737 MAX tires to Boeing’s Seattle plants. “Based on what we know now, we believe there will be no material impact on our delivery scope for the year in relation to this issue,” Spirit said in a statement.

For now, Boeing hasn’t backed down from its plans to accelerate production of the 737 to an average of 38 aircraft per month, which is the next step in its plan to return production to pre-Covid levels by the middle of the decade. Boeing said the time needed to move to the higher rate will depend on the progress the company makes in resolving the issue with its supplier.

—With assistance from Alan Levine and Danny Lee.

(Updates on the 737 MAX background in the seventh paragraph.)

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