TLDR:
- Boeing secured new fastener supplies for 737 MAX, avoiding production slowdown
- Fire at SPS Technologies created industry-wide shortage of specialized nuts and bolts
- Boeing jets originally meant for Chinese airlines are returning to the U.S. amid trade tensions
- Malaysia Airlines in talks to acquire Boeing 737 MAX aircraft
- Boeing Q1 earnings report expected April 23 with analysts forecasting $1.24 loss per share
Boeing has successfully secured new stocks of specialized nuts and bolts for its 737 MAX jets, resolving a potential production crisis. The company found alternate suppliers in recent weeks after a February fire at SPS Technologies’ factory threatened to disrupt the assembly line.
“We don’t expect a near-term impact to commercial production,” a Boeing spokesperson stated.
This supply chain fix comes at a critical time as Boeing faces mounting pressure from U.S.-China trade tensions. The company is preparing to release its first-quarter earnings report on Wednesday, April 23.
Reports indicate Chinese airlines have been instructed to halt Boeing deliveries following President Trump’s decision to raise baseline tariffs on Chinese imports to 145%. China responded with 125% tariffs on U.S. goods.
Trade War Fallout
The consequences of these trade tensions are already visible. A Boeing 737 MAX originally destined for China’s Xiamen Airlines returned to Boeing’s U.S. production facility on Sunday.
A second jet meant for a Chinese customer was also en route back to the U.S. on Monday.
These aircraft were part of a larger group waiting at Boeing’s Zhoushan facility in China for final preparations before delivery to Chinese carriers.
The 737 MAX represents Boeing’s most popular model. Production has faced challenges from delays and quality control concerns in recent months.
Boeing CEO Kelly Ortberg has ambitious plans to increase 737 MAX production. He aims to exceed the regulatory-capped rate of 38 jets per month in 2025, targeting 42 monthly deliveries by year’s end.
This would roughly double the company’s January production levels.
New Opportunities Emerge
While Chinese orders face uncertainty, other airlines see opportunity. Malaysia Airlines’ parent company, Malaysia Aviation Group, confirmed they are in discussions with Boeing to acquire new 737 MAX aircraft.
The airline views the situation as a chance to secure earlier-than-expected deliveries.
Russia has also expressed interest in taking over Chinese orders. They proposed using frozen state assets to pay for the aircraft.
The fastener shortage affecting Boeing extends beyond the company to the broader aerospace industry. Some suppliers taking on contracts to provide alternate fasteners are increasing prices to reflect rising costs of materials and labor.
Industry experts note that specialized fasteners, which can cost hundreds of dollars each, might see double-digit percentage price increases.
It takes hundreds of thousands of fasteners to produce a narrowbody jet like the 737. While most are standard components made by multiple manufacturers, certain fasteners produced by SPS Technologies are highly specialized and difficult to source elsewhere.
SPS has been Boeing’s sole supplier for as many as 40 parts. According to Jefferies analyst Sheila Kahyaoglu, securing alternative sources for some parts could take nine months or longer.
Kahyaoglu added that Boeing’s risk is somewhat limited by its currently low production rates and generally large parts inventory.
Fastener suppliers Howmet Aerospace and LISI Aerospace have reported receiving additional inquiries for their products following the SPS factory fire.
The last time Boeing faced an unexpected fastener shortage in 2007, it was forced to delay the first test flight of its 787 Dreamliner.
Wall Street analysts maintain a Moderate Buy consensus rating on Boeing stock. This is based on 12 Buys, five Holds, and one Sell assigned in the past three months.
The average price target sits at $193.06 per share, suggesting a 19.25% upside potential from current levels.
Boeing stock closed at $161.90 on April 17, up 3.47%. In pre-market trading, the stock was down 1.37% at $159.69.
Analysts expect Boeing to report a loss of $1.24 per share for the first quarter, wider than the $1.13 per share loss reported in the same period last year.
The aerospace giant’s earnings call will be closely watched as investors look for updates on production rates, quality control measures, and strategies to navigate the U.S.-China trade tensions.
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