Boeing (NYSE: BA) garnered the market’s attention after US aviation safety officials initiated fresh scrutiny into the aircraft manufacturer, focusing on inspection stipulations concerning the company’s 787 Dreamliner airplane and potential falsification of documents by employees. The stock of Boeing ended Tuesday’s trading session at $176.71, down $1.64, or -0.92%, from the prior close.
The Federal Aviation Administration (FAA) announced that the investigation stemmed from Boeing’s voluntary disclosure last month, indicating possible lapses in requisite checks to verify sufficient connecting and grounding where the aircraft wings attach to the fuselage on specific 787 Dreamliner planes.
Specifically, according to the FAA, Boeing informed them in April that necessary checks might not have been done, particularly regarding the bonding and grounding at the wing-fuselage junction of certain 787 jets.
The FAA revealed that the investigation also delves into whether the aircraft manufacturer executed the stipulated checks as required and if there were instances of staff falsifying aircraft-related documents. Additionally, the regulatory organization stated that Boeing is now conducting re-inspections on all 787 aircraft within the production framework and is devising a strategy to resolve the issues in the in-service fleet.
The FAA had earlier announced heightened supervision of Boeing, specifically the 787 Dreamliner, following the discovery of shortcomings in the production process of the wide-body aircraft in 2022.
Boeing has asserted that it promptly informed the FAA and clarified that the issue did not pose an urgent safety-of-flight concern. The company shared an in-house email dated April 29 from Scott Stocker, head of the 787 project, addressed to Boeing’s South Carolina workforce, where the manufacturing of Dreamliner is carried out.
Stocker’s email revealed that a staff member raised concerns about observed deviations from proper procedures on the factory floor, prompting an internal investigation. The subsequent review revealed violations of company norms, wherein necessary tests were neglected but falsely documented as completed. Boeing affirmed its commitment to taking swift and comprehensive corrective measures involving multiple staff members.
The recent probe comes on the heels of another concerning development in March when an ex-Boeing quality control supervisor, John Barnett, was found lifeless in his vehicle, apparently from self-inflicted gunfire, following his dismissal linked to safety issues at Boeing’s North Charleston, South Carolina, production facility.
Boeing’s reputation has faced fresh scrutiny due to manufacturing and quality control issues, notably highlighted by an incident in January where a door plug flew off a 737 Max 9 aircraft during flight. This incident, along with previous crashes involving 737 Max aircraft, has drawn attention to Boeing’s production practices and quality control standards. The FAA attributed “multiple occurrences” of quality control deficiencies in 737 Max production to Boeing, with the crashes in 2018 and 2019 being linked to faulty flight control software.
The fresh probe is expected to keep Boeing’s stock slightly bearish in the near term.
The historical price chart indicates that the stock of Boeing is declining after facing resistance at $180. The next major support is anticipated to be only near $165. Additionally, the stock is trading below its 50-day moving average, while the stochastic RSI is in the overbought region. Therefore, we anticipate Boeing’s stock to remain in a downtrend in the short term.
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