Boeing Company (BA)

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Boeing Slumps On 787 Dreamliner Production Cut After FAA Finds Structural Flaws
By: TheStreet | July 13, 2021

• Boeing said it would likely deliver 'fewer than half' of the roughly 100 787 Dreamliners it has in inventory this year as it works to fix a structural flaw identified earlier this week by the FAA.

Boeing Co. (BA) shares slumped lower Tuesday after the planemaker said it would trim production of its 787 Dreamliner following the discovery of a structural flaws in the troubled twin-aisle aircraft.

Boeing said it would deliver "fewer than half" of the 787s currently in inventory by the end of the year, down from its prior forecast of "the vast majority" as it works with the Federal Aviation Administration to fix gaps in what is known as the 'forward pressure bulkhead'.

The FAA said late Monday that the issue was discovered "as part of the ongoing system-wide inspection of Boeing's 787 shimming processes" in undelivered planes, but noted that some Dreamliners already in service could eventually require a similar fix.

"Based on our assessment of the time required to complete this work, Boeing is reprioritizing production resources for a few weeks to support the inspection and rework," Boeing said in a statement Tuesday. "As that work is performed, the 787 production rate will temporarily be lower than five per month and will gradually return to that rate.

"We will continue to take the necessary time to ensure Boeing airplanes meet the highest quality prior to delivery," Boeing added. "Across the enterprise, our teams remain focused on safety and integrity as we drive stability, first-time quality and productivity in our operations."

Boeing shares were marked 3.4% lower in early trading Tuesday to change hands at $230.20 each.

Boeing also published second quarter delivery figures Tuesday, with an overall tally of 79 planes that included 50 737 MAX jets and 12 787 Dreamliners.

Last month, United Airlines (UAL) confirmed plans to buy a total of 270 new planes from both Boeing and Airbus (EADSY) for around $30 billion in the largest single aircraft deal in the carrier's history.

United will buy 50 Boeing 737 Max 8 jets and a further 150 Max 10s, with the first of the Max 8s expected to begin carrying passengers later this summer. United will also buy 70 Airbus A321 Neos, the planemaker's narrowbody rival to the Max, as part of the $30 billion list price order. United also said it will add 25,000 new jobs as a result of the fleet expansion.

Boeing will publish its second quarter earnings on July 28.

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