Stephen Brashear
As Boeing’s (NYSE:BA) quality issues escalate, major U.S. airlines are now scaling back their aircraft delivery expectations or are considering a switch to rival plane makers to meet targets.
Boeing (BA) planes have been involved in back-to-back safety mishaps, the latest being a 777-300 flying from Sydney to San Francisco – a United Airlines (NASDAQ:UAL) flight – that was forced to land on Monday due to fuel leaking from its undercarriage. This is the fifth incident involving a Boeing aircraft in just seven days.
United (UAL) asked Boeing (BA) to stop building 737 Max 10s as it eyes ordering a smaller variant of the plane from Airbus (OTCPK:EADSF). The announcement was made after three of the airline’s flights were involved in incidents last week, in addition to this week’s fuel leakage incident.
Southwest Airlines (NYSE:LUV) is now expecting 46 737-8 aircraft deliveries in 2024, compared to its prior expectation of 58 737-8 aircraft, which will likely lead to a one-point reduction in its 2024 capacity plans.
Delta Air (NYSE:DAL) is preparing for 737 Max 10 deliveries to be delayed to as late as 2027. It’d expected to begin receiving the planes next year.
This year’s incidents have only added to the intense scrutiny that Boeing (BA) has been facing since two fatal crashes involving 737 Max planes in 2018 and 2019.
As for the Alaska Air (ALK) flight’s midair blowout in January, the National Transportation Safety Board will hold a hearing on August 6 and 7 on its investigation into the incident.
CFRA Research remains bearish on Boeing (BA), and cut its 2024 EPS estimate by $0.67 to $3.34 (consensus $3.37). “BA’s ability to deliver planes, for the near term, is going to suffer,” analyst Stewart Glickman warned.
Stock moves YTD: BA -29.3%, ALK -1.2%, LUV -0.4%, UAL +2.2%, DAL +6.3%.
