Boeing Faces Production Slowdown Amid Regulatory Scrutiny, Prompts Industry Ripples and Investor Concerns

Zinger Key Points
  • Boeing's 737 MAX production declines due to regulatory checks, with monthly rates dropping below FAA limits.
  • Boeing implements measures to address assembly errors, reduce backlog, and restore confidence amidst industry concerns.

Production of Boeing Company’s BA 737 MAX jetliners has reportedly declined significantly in recent weeks due to increased factory inspections by U.S. regulators and a slowdown on the assembly line near Seattle as workers focus on completing remaining tasks.

Following a blowout incident on a 737 MAX in January attributed to an assembly error, the FAA has implemented a production limit of 38 jets per month, Reuters reported, citing industry sources.

However, the monthly production rate has been fluctuating well below this level, and in late March, it dropped as low as single digits, the report added.

Boeing referenced remarks from CFO Brian West, who stated last month that the company is implementing comprehensive measures to enhance quality and restore confidence, Reuters stated. 

These measures include reducing the backlog of pending work, known as traveled work, as the FAA intensifies its audits.

The slowdown in Boeing’s production is anticipated to have a ripple effect throughout the airline industry, prompting carriers to adjust flight schedules or extend current jet leases to meet demand, Reuters said.

According to Benzinga Pro, BA stock has lost over 12% in the past year. Investors can gain exposure to the stock via IShares U.S. Aerospace & Defense ETF ITA and Invesco Aerospace & Defense ETF PPA.

Price Action: BA shares are trading higher by 1.11% to $186.97 on the last check Thursday. 

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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