Boeing faces more questions about its aircraft after fresh incident

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A dangerous mid-air breach in the fuselage of a 737 Max is just the latest production lapse at Boeing, raising questions about whether the manufacturer can deliver a quality product as it strives to build planes at a faster rate.

The incident, though it resulted in no serious injuries, was alarming enough for US aviation regulators to ground about 171 jets, pending inspection. 

Boeing said it supported the decision and that safety remained its “top priority”. Executives of the plane maker were in close contact with affected airlines over the weekend. The company will be keen to reassure customers and investors that the problem is contained. Boeing’s shares have risen more than 18 per cent over the past 12 months and closed on Friday just shy of $250.  

While the plane maker is in better shape than it was four years ago when Dave Calhoun took the helm as chief executive, its recent history has been littered with production problems. Last month, Boeing asked airlines to check for loose bolts on the system controlling the Max’s rudder, while misdrilled holes and improper fittings were found on some jets earlier in 2023. Boeing was dogged by supply chain shortages in 2022, and beginning in 2020 a series of issues on the 787 led to 20 months of delivery delays. It has even stumbled on its flagship programme to build the US president’s new Air Force One.

Problems that seem insignificant separately appear more troubling in the aggregate, analysts say — particularly in the shadow of the devastating design flaw that triggered two deadly plane crashes and led to a worldwide grounding of the 737 Max in 2019.

Although the investigation into the Alaska Airlines’ incident has only just begun, long-term industry watchers say it has raised more questions about the quality of Boeing’s manufacturing. 

“This sort of failure should not happen on any aeroplane but for it to happen on a three month-old aircraft is unacceptable,” said Nick Cunningham, analyst at Agency Partners.

“This adds to the impression that Boeing has forgotten how to build aircraft,” Cunningham added.

John Cox, a retired pilot and chief executive of Safety Operating Systems, an aviation safety consultancy in the US, said that Boeing was still able to produce good machines but added: “They can do and do build high-quality aeroplanes [but the accident] brings into focus their quality assurance process and how robust that is.”

The incident has happened at a critical time for the US plane maker which is in the middle of trying to ramp up the rate at which it builds the Max. 

The manufacturer is paid upon delivery, so increasing commercial production is critical to achieving the company’s financial goals, including generating $10bn in annual free cash flow by 2026. It currently builds 38 jets a month at one of its factories near Seattle and said it plans to reach 50 a month by the middle of the decade.

Calhoun has said the company is essentially running two production lines as it readies planes in storage for delivery to customers. 

The latest incident “begs the question . . . how is the quality control going as they try to ramp up?” said Bank of America analyst Ron Epstein.

The incident also draws in Spirit AeroSystems, a key Boeing supplier, which installs the plugged door as part of its construction of the 737 Max fuselage. The ultimate responsibility, however, for any issues lies with the plane maker, said industry experts. 

The breach damages confidence that Boeing can “competently and safely” ramp up the number of commercial jets it makes each month, Cunningham said, and “that ramp, and the cash flow it is expected to bring, is the basis for the share price”.

There will inevitably be knock-on effects from the investigation, including potentially greater scrutiny from the FAA of Boeing aircraft coming off the production line. 

Boeing is asking the FAA to grant it an exemption to safety regulations on the smallest variant of the Max family, the Max 7, which along with the Max 10, has yet to be certified. The jet’s design has a flaw that forces pilots to limit use of the anti-icing system in dry conditions, because it could cause the engine’s housing to overheat and break off. The manufacturer wants an exemption from the regulation until May 2026 while it searches for a technical solution.

With the loose bolts and now the fuselage breach, “it might be OK, but optically, it doesn’t look great”, Epstein said.

The rupture could also hurt the manufacturer if it gives China another reason to push back the date it begins accepting new deliveries of the Max. The country is an important market for Boeing, but a Chinese airline has yet to take delivery on a new Max since the 2019 grounding. Though Boeing delivered a 787 to China last month, the company has been a pawn in rising geopolitical tensions between Washington and Beijing.

Industry watchers have thought for several months that China was warming to the possibility of new deliveries. But as Scott Hamilton, head of consultancy and news site Leeham News, noted: “Anything could cause Beijing to change its mind again.”