After repeated delays in the validation of the problematic 737 Max aircraft, Boeing is once again prolonging the time frame for when it anticipates the planes will be re-certified for flight as the coronavirus pandemic stymies progress.
Boeing stock slipped over $8 today, or more than 6% on the news.
Sources familiar with the latest expectations for repairs say the plane isn’t likely to get Federal Aviation Administration to resume flights until August or beyond, a small, but a key shift from Boeing’s earlier plan to have the plagued plane cleared by the Federal Aviation Administration by early summer.
The coronavirus has been taking a toll on the companies finances as well recently, as last month the CEO mentioned the economic impact in a letter to employees.
“On top of the work of safely returning the 737 MAX to service and the financial impact of the pause in MAX production, we’re now facing a global economic disruption generated by the COVID-19 coronavirus,” Boeing’s CEO Dave Calhoun and CFO Greg Smith wrote in a note to employees in March.
“The Covid-19 crisis is complicating the process, but we’re making good progress and focused on managing scheduling risks as they arise. All of course, subject to ongoing regulator oversight,” a Boeing spokesperson told CNBC.
Boeing (BA) further jarred investors with reports that it is also anticipated to pull back on 787 Dreamliner production again when it reports first-quarter earnings next week.
Meanwhile, the $4.2 billion Boeing-Embraer deal reportedly encountered an implementation issue in the manner in which their joint-venture is set up, sources told Reuters. The two sides have a deadline of 11 p.m. ET to reach an agreement. The European Union’s regulator also stated that said it will not have completed a necessary anti-trust investigation until August.
Boeing is scheduled to hold its annual shareholder meeting Monday and report earnings on Wednesday.
The iShares U.S. Aerospace & Defense ETF (ITA), which has more than 11.57% of the plane manufacturer in its holdings, slipped 0.6% amid the news, while the Invesco Aerospace & Defense ETF (PPA), which has a 6% allocation of Boeing remained relatively stable.
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